Refer to the normal-form game of price competition in the payoff matrix below       Firm B Low Price High Price Firm A Low Price 0, 0 50, −10 High Price −10, 50 20, 20   Suppose the game is infinitely repeated, and the interest rate is 20 percent. Both firms agree to charge a high price, provided no player has charged a low price in the past. This collusive outcome will be implemented with a trigger strategy that states that if any firm cheats, then the agreement is no longer valid, and each firm may make independent decisions. Will the trigger strategy be effective in implementing the collusive agreement? Please explain and show all necessary calculations.

Consider a market with two firms, Target and Wal-Mart, that sell CDs in their music department. Both stores must choose whether to charge a high price ($30) or a low price (s13) for the new Miley Cyrus CD. These price strategies with corresponding profits are depicted in the payoff matrix to the right. Target's profits are in red and Wal-Mart's are in blue. Target Target's dominant strategy is to pick a price of S Price = $30 Price = $13 $7,000 $2.500 Price = $30 S7,000 $15,000 Wal - Mart $15.000 $5,000 Price = $13 $2,500 $5,000 Wal-Mart's dominant strategy is to pick a price of $ The new equilibrium market wage will be and the new equilibrium market employment level will be higher unchanged lower higher lower unchanged

Consider the infinitely repeated game constructed from the following stage game. b1 b, a1 10,10 4,24 a2 24,4 0,0 Suppose that both players use the discount factor & to evaluate future payoff streams. What is the smallest value of d such that there exists a subgame perfect Nash equilibrium in which the action profile is played in all periods? (Please report your answer in decimal form, rounded if necessary to the nearest 0.01.)

In a Nash equilibrium Group of answer choices players are always maximizing their joint profit. one player is always earning a higher profit than the other. equilibrium can be achieved when players play the game sequentially. all of the above must occur. none of the above is true.

Two firms compete in prices in a market for a homogeneous product. In this market there are N > 0 consumers; each buys one unit if the price of the product does not exceed $10, and nothing otherwise. Consumers buy from the firm selling at a lower price. In case both firms charge the same price, assume that N/2 consumers buy from each firm. Assume zero production cost for both firms.   Suppose that the firms set prices simultaneously in a game that is repeated infinitely. Let denote the time- discount parameter. Propose trigger price strategies for both firms yielding the collusive prices of ($10, $10) each period. Calculate the minimal value of that would enforce the trigger price strategies you proposed.

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Consider the Nash Bargaining game. There are 2 players who have to decide how to split one dollar. The bargaining process works as follows. Players simultaneously announce the share they would like to receive sį and s2, with 0 1, the both players fail to achieve an agreement and receive zero. Find a strictly dominant strategy. Find a pure strategy 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."

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Consider an example of the prisoner's dilemma where 2 firms are making sealed bids on a highway-construction contract and each firm is allowed to bid either $120 million or $130 million. If both firms bid the same price, the job is shared equally and each firm earns half the value of its bid. Otherwise the lowest bidder wins the contract and receives the full value of its bid (and the other bidder earns zero). The non-cooperative outcome in this situation is O A. both firms bid $130 million. B. one firm bids $120 million, the other firm bids $130 million. C. both firms bid $60 million. D. both firms bid $120 million. O E. both firms bid $65 million. OO