Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 4 units of utility, while the small rival suffers a loss of utility of 2. If the two companies select the same technology, Microsoft suffers a loss of utility of 2 while the rival gains 2 units of utility. Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously. Microsoft Technology A Technology B Rival Technology A Rival: , Microsoft Rival: , Microsoft Technology B Rival: , Microsoft Rival: , Microsoft True or False: There is an equilibrium for this game in pure strategies.

Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 4 units of utility, while the small rival suffers a loss of utility of 2. If the two companies select the same technology, Microsoft suffers a loss of utility of 2 while the rival gains 2 units of utility. Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously. Microsoft Technology A Technology B Rival Technology A Rival: , Microsoft Rival: , Microsoft Technology B Rival: , Microsoft Rival: , Microsoft True or False: There is an equilibrium for this game in pure strategies.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 2MC

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Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 2 units of utility, while the small rival suffers a loss of utility of 1. If the two companies select the same technology, Microsoft suffers a loss of utility of 1 while the rival gains 1 units of utility. Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously. Microsoft Technology A Technology B Microsoft Rival: Microsoft Technology A Rival: Rival Microsoft Rival: Microsoft Technology B Rival: True or False: There is an equilibrium for this game in pure strategies. O True O False
Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 3 units of utility, while the small rival suffers a loss of utility of 1. If the two companies select the same technology, Microsoft suffers a loss of utility of 1 while the rival gains 1 units of utility.
Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 6 units of utility, while the small rival suffers a loss of utility of 2. If the two companies select the same technology, Microsoft suffers a loss of utility of 2 while the rival gains 2 units of utility. Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously. Microsoft Technology A Technology B Rival Technology A Rival: , Microsoft Rival: , Microsoft Technology B Rival: , Microsoft Rival: , Microsoft True or False: There is no equilibrium in pure strategies. True False Note:- Do not provide handwritten…
Alice and Julia want to spend time together but have different preferences for their activities. They can choose between two options: going to a soccer game or watching a football game. Alice prefers football and Julia prefers the football game, but they both prefer being together over being apart. If they both choose to attend a soccer game then Julia receives a payoff of 2 and Alice a payoff of 1. If they both choose to attend a football game, then Julia receive a payoff of 1 and Alice a payoff of 2. If one chooses a football game and the other a soccer game then they both receive a payoff of O. The payout matrix below illustrates these payoffs. Which of the following statements are true: I. There is a dominant strategy II. A nash equilibrium exists where Alice attends a football game and Julia attends a soccer game III. A nash equilibrium exists where both friends attend a soccer game IV. Both attending a football game is a stable outcome. Alice Soccer Football Julia Soccer Football…
Martin has a brother and can take a selfish action, which pays him $10 and his brother $0, or an altruistic action, which pays him $6 and his brother $6. The parents love their children equally and decide how to distribute $20 between them. The parents' payment is the minimum of their two children's payments. Assume that the game is simultaneous. Find the Nash equilibrium.
Supersubs and Hotwich are the only two sandwich shops in town. They have differentiated their products so that Supersubs sells cold sub sandwiches and Hotwich sells hot sandwiches. At any given time, however, Supersubs could expand its selection by purchasing a toaster and Hotwich could also easily start offering cold sandwiches. Refer to the game for the expected payoffs of their possible choices. Supersubs Sell cold only Expand selection Hotwich Sell hot only A $12$12 $10$10 B $18$18 $2$2 Expand selection C $2$2 $19$19 D $5$5 $6$6 What is the unique equilibrium outcome for a one-time game?
The US and Canada have overfished North Atlantic cod stocks nearly to the point of extinction. Both countries wish to preserve the cod industry (and hence the cod stocks), so the two countries sign an agreement to limit fish hauls. Each country has two possible strategies: comply with the agreement (limit fishing) or renege on the agreement (overfish). Each country’s payoffs for different strategy combinations are given in the matrix below. The numbers in the cells represent utilities, and the payoff ordering is (US, Canada). QUESTIONS: 1.If this is a one-shot game (i.e., it is played once), do the players have a dominant strategy? If so, what is it? Briefly explain your answer. 2.What is the equilibrium of this game? Is it Pareto-optimal? How do you know?
Coke and Pepsi are in a market together in which they can each make the following sequence of moves. First, Coke decides whether to launch a SPORTS drink or an ENERGY drink. Second, Pepsi observes Coke's choice then chooses SPORTS and ENERGY. If ENERGY is chosen by both firms, Coke gets 20 and Pepsi 60. If Coke chooses ENERGY and Pepsi SPORTS the payoffs are 50 and 30 to Coke and Pepsi, respectively. If Coke opts for SPORTS and Pepsi opts for ENERGY the payoffs are 50 and 30 to Coke and Pepsi. Finally, if both choose SPORTS the payoffs are 30 to Coke and 50 to Pepsi. In the subgame perfect (or credible) equilibrium, what do we observe each firm do? ● Coke opts for ENERGY and Pepsi SPORTS. ● Coke opts for SPORTS and Pepsi ENERGY ● Coke opts for SPORTS and Pepsi SPORTS Coke opts for ENERGY and Pepsi ENERGY None of above.
Consider the R&D game being played by Huawei and Samsung. Huawei can choose to develop a new camera for its phone (C) or not (N). Samsung observes the choice of Huawei, then can make its own choice of C or N. The payoffs are as follows. If Huawei opted for C and Samsung likewise chose C, the payoffs are (100, 80) for Huawei and Samsung, respectively. If the choices are C by Huawei and N for Samsung, the payoffs are (120, 60). If Huawei opts for N and Samsung C, the payoffs that ensue are (80 120). If Huawei chooses N and Samsung N the payoffs are (140, 100). Which of the following statements are true? N by Samsung following N by Huawei is a credible strategy for Samsung C by Samsung following C by Huawei is a credible strategy for Samsung N by Samsung following C by Huawei is a credible strategy for Samsung C is a dominant strategy for Samsung N is a dominant strategy for Samsung
Consider the following three-stage duopoly game. There are two firms in the market: Firm 1 and Firm 2. In the first stage, a first-price auction is conducted to determine the order of moves. The firm with the highest bid (first mover) pays a cost equivalent to its bid and chooses its action in the second stage. After observing this action, the other firm (second mover) chooses its action in the third stage. When there is a tie in the first stage (both firms submit the same bid), a coin is tossed to determine the winner, and only the winner pays its bid. Each firm has the following three possible actions: small (expansion), medium (expansion) and large (expansion), and the payoffs they obtain in the market (not the final payoffs yet) are shown below: The second mover Small Medium Large 16, 12 Medium 18, 8 19, 7 13, 10 14, 11 Small 9, 9 10, 13 12, 10 The first mover Large 14, 12 The final payoff is equivalent to the payoff obtained in the market minus the cost (if any) paid in auction.…
Four firms (A, B, C, and D) play a pricing game (i.e. Bertrand). Each firm (i) may choose any price P; in [0, infinity) with the goal of maximizing its own profit. (Firms do not care directly about their own quantity or others' profits.) Firms A and B have MC = 10, while firms C and D have MC = 20. The firms serve a market with the demand curve Q = 100 - P. All firms produce exactly the same product, so consumers purchase only from the firm with the lowest price. If multiple firms have the same low price, consumers divide their prices evenly among the low-priced firms. If firms choose price simultaneously: A) a price firm A would choose in equilibrium: a price firm B would choose in equilibrium: B) a price firm C would choose in equilibrium: C) a price firm D would choose in equilibrium:
Suppose Jordan and Lee are trying to decide what to do on a Friday. Jordan would prefer to see a comedy while Lee would prefer to see a documentary. One documentary and one comedy are showing at the local cinema. The payoffs they receive from seeing the films either together or separately are shown in the payoff matrix below. Both Jordan and Lee know the information contained in the payoff matrix. They purchase their tickets simultaneously, ignorant of the other's choice. Picture Which of the following statements is true? Select one: a. The lower-left cell is the only Nash equilibrium. b. Both the lower-left and upper right cells are Nash equilibria. c. Both the upper-left and lower-right cells are Nash equilibria. d. The upper-right cell is the only Nash equilibrium.