Refer to the normal-form game of advertising shown below. Firm A Advertise Do Not Advertise Firm B Advertise $0, $0 $10, $175 Do Not Advertise $175, $10 $125, $125 Suppose there is a 10 percent chance that the advertising game depicted in Figure 10- will end next period. What is the present value to firm A of agreeing to the strategy (do not advertise, do not advertise)?

Refer to the normal-form game of advertising shown below. Firm A Advertise Do Not Advertise Firm B Advertise $0, $0 $10, $175 Do Not Advertise $175, $10 $125, $125 Suppose there is a 10 percent chance that the advertising game depicted in Figure 10- will end next period. What is the present value to firm A of agreeing to the strategy (do not advertise, do not advertise)?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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** please be advised this is for practice only in preperation ** (a) x = 4, y = 3(b) x = 1, y = 2(c) x = 0, y = 3(d) x = 4, y = 0(e) None of the values above make this strategy profile a Nash equilibrium.
Refer to the normal-form game of price competition shown below. Introduce A Do Not Introduce B Clone Do Not Clone (5,5) (-10, 50) (500,0) Firm A must decide whether or not to introduce a new product. If firm A introduces a new product, firm B must decide whether or not to clone the product. The subgame perfect Nash equilibrium to this game is: Firm A plays "Do Not Introduce"; firm B plays "Clone" if firm A plays "Introduce." Firm A plays "Do Not Introduce"; firm B plays "Do Not Clone" if firm A plays "Introduce." Firm A plays "Introduce"; firm B plays "Clone" if firm A plays "Introduce." Firm A plays "Introduce"; firm B plays "Do Not Clone" if firm A plays "Introduce."
7 Find all subgame perfect equilibria of the game
a) Write out the extensive form of a game between a farmer (playing in the first round) and nature (playing a mixed strategy in the second round). Assume that the farmer can either pay a cash rent of $1500 for land (English system) or 1/2 of crop production to the landlord (sharecropping). Assume the farmer is planting corn and will produce 2 tons of corn. Assume that nature has a 50% chance of playing a strategy in which the price of corn is $3500/ton and a 50% chance of playing a strategy in which the price of corn is $500/ton. The farmer keeps any money left after paying cash rent and sells any corn left after paying the landlord in sharecropping. b)What is the most that a risk neutral farmer would be willing to pay for an accurate prediction of the price of corn in problem 1 before choosing whether to pay cash rent or sharecrop?
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Consider the extensive form game show in the figure below. How many strategies does Player 2 have in this game? 6 Numerical answer a2 (2,2,1) 2 a1 b₂ 1 (2,4,2) 3 C₂ a3 by a2 d₂ (3,5,3) (3,1,2) b₂ b3 (4,2,0) (2,0,2) az (3) b3 (0,3,4)
38. Consider the following game. There are ten churches in town: nine are Catholic and one is Eastern Orthodox. All churches conduct their divine services at 10am on Sunday morning. You and your friend, without communication, agree to meet at a church service. If you fail to meet at the same church, then you are sad and become a Doomer. What is this game's focal point? Remember that you cannot communicate about this. (A) You meet at any of the Catholic churches. (B) You meet at any of the churches – denomination does not matter. We're all the same bro. (C) You meet at the Orthodox church. (D) There is no focal point. 39. Consider a fractional-reserve banking system in which an initial deposit of $1,000 can generate up to $4,000 in money. What is the reserve ratio? (A) 4 percent. (B) 5 percent. (C) 25 percent. (D) 75 percent.
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Which is false for the following game? C R. T. 3, 2 0,3 3, 3 M 5,0 4, 1 3, 1 B 2, 2 4, 5 1, 1 A. (M,C) and (B,C) are the only pure strategy Nash Equilibria OB. There is a Nash cquilibrium in which R is played with positive probability C. There is no Nash equilibrium in which L is played with positive probability OD. There is no Nash equilibrium in which both players choose two of their actions with positive probability
There is a first-priced auction where 3 players value object at v1=v2=90 and v3=70. Player with highest bid wins object and pays own bid. Player i's payoff is vi-bi. When there is a tie, winner is player with smallest number (ex. player 2 wins if ties with player 3). 1) Is (90,90,70) a Nash equilibrium? 2) Can player 3 win in a Nash equilibrium if it was second-price auction?
q19 If you advertise and your rival advertises, you each will earn $4 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $1 million and the non-advertising firm will earn $5 million. If you and your rival plan to be in business for 10 years, then the Nash equilibrium is a. for each firm to not advertise in any year. b. for neither firm to advertise in early years but to advertise in later years. c. for each firm to advertise every year. d. for each firm to advertise in early years but not advertise in later years.