Store A: Advertising or No advertising O A. Only Store A advertises. OB. Only Store B advertises. OC. Both Store A and Store B advertise. OD. Neither store advertises. Ads No ads Store B: Advertising or No advertising Store B: Advertising or No advertising Figure 12.8 Figure 12.8 depicts an advertising game between two stores. Which of the following possible outcomes is a Nash equilibrium of the game? Ads No ads Ads No ads Store A: $200 Store B: $200 Store A: $400 Store B: $100 Store A: $100 Store B: $400 Store A: $300 Store B: $300

Store A: Advertising or No advertising O A. Only Store A advertises. OB. Only Store B advertises. OC. Both Store A and Store B advertise. OD. Neither store advertises. Ads No ads Store B: Advertising or No advertising Store B: Advertising or No advertising Figure 12.8 Figure 12.8 depicts an advertising game between two stores. Which of the following possible outcomes is a Nash equilibrium of the game? Ads No ads Ads No ads Store A: $200 Store B: $200 Store A: $400 Store B: $100 Store A: $100 Store B: $400 Store A: $300 Store B: $300

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 4MC

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◄ Search 12:47 PM Sun Nov 12 ← Note Nov 12, 2023 Uptown's price strategy The Nash equilibrium occurs when High Low LED RareAir's price strategy High $12 $15 The more favorable outcome would be for $12 Tt ✪ $6 B Low $6 D $8. $15 $8 S O both firms have an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the dominant strategy of cell A. 92% neither firm has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the dominant strategy of cell D. O one firm consistently has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the high-price strategy of cell B. O one firm consistently has an incentive to deviate from this strategy given the strategy of the competing firm. It is shown by the high-price strategy of cell C. O the firms to collude and use the high-price strategy but this strategy requires cooperation. O one firm to take the lead and let the…
NASH EQUILIBRIUM Consider the following game in strategic form. bị b2 a1 10,2 4,20 a2 6,28 9,14 аз 8,6 12,4 1-T-0 1-T The Equilibrium Existence Theorem guarantees that this game possesses at least one Nash equilibrium of the form (T*, o*,T*). Which values of a* are part of such an equilibrium? (Mark all values for which an associated equilibrium exists.) Select one or more: O 0.00 O 0.60 O 0.30 O 1.00 O 0.75 O 0.10 O 0.80 O 0.25
The payoff matrix below describes a one-shot game in which two farmers ("Player A" and "Player B") choose between planting corn or planting wheat. The payoffs in this matrix represent thousands of dollars of income, so more is better. Pla yer A Plant Corn Plant Wheat What kind of equilibrium is this? Plant Corn Dominant Strategy Equilibrium Nash equilibrium 3, 3 Player B 5,0 Both a Nash and a Dominant Strategy Equilibrium O No equilibrium Plant Wheat 0,5 1, 1
Consider the payoff matrix of Hulu and Netflix. Why don't both firms just raise prices? NETFLIX HULU 15, 15 8, 20 20, 8 10, 10 O It is in each firm's profitable interest to lower prices, no matter what the other competitor does. O Raising prices is illegal in this case. O Firms are concerned about a third competitor entering at higher prices. O Higher prices will increase the number of customers beyond what the firms can handle.
2. Provide the normal-form expression to the extensive-form game below, and find all pure-strategy Nash equilibria there. Find the subgame-perfect Nash equilibrium then. A B X E Y B A B F t G F G BF B D A 0 3. Find the subgame perfect Nash equilibria (may or may not be unique) in the game below. A B 100 30 F 60 9 5 B 3 5 12 10 60 10 80 10 180 60 200 40
Consider the following price game: Firm 1 Firm 2 High Low High 20, 20 12, 24 Low 24, 12 14, 14 Remark: In simultaneous move games (games with rows and columns) theconvention is to write the row player’s payoff first and the column player’spayoff second. (a) What is the Nash equilibrium of this game? Recall that for each playeryou should find the best response to each of the opponents’ strategies andunderline the associated payoff. Then look for a cell where both strategiesare best responses to each other. This is a Nash equilibrium. (b) Does either firm have a dominate strategy (a strategy that is always abest response)?
Café B's strategies 80 cups 50 cups $1500 $500 O $3,000; 80; 80; 80 If the firms can collude, industry profits equal cups of coffee each. In the Nash equilibrium, Cafe A will offer of coffee. O $4,000; 50; 80; 80 O $4,000; 80; 50; 50 O $3,000; 50; 80; 80 O $3,000; 100; 50; 50 Café A's strategies 80 cups $1500 $2500 50 cups $2500 There are only two coffee shops in Ames, and they are trying to decide how many cups of coffee to offer. The payoff matrix for this duopoly game is shown above. $2000 and both firms would offer $500 cups of coffee, and Cafe B will offer $2000 cups
1. Find all subgame perfect nash equilibrium 2. Find a nash equilibrium that is not SPNE, and explain why it is not an SPNE.
20) Given the payoff matrix in the figure, the Nash equilibrium outcome of this game is for: Ajinomoto Produce 30 Produce 40 million pounds million pounds Ajinomoto makes $180 million Ajinomoto makes $200 million Produce 30 million ADM makes $180 million ADM makes $150 million pounds Ajinomoto makes $150 million Ajinomoto makes $160 million Produce 40 million ADM makes $200 million ADM makes $160 million pounds O A. each firm to produce 30 million pounds. B. each firm to produce 40 million pounds. C. ADM to produce 30 million pounds and for Ajinomoto to produce 40 million pounds. D. ADM to produce 40 million pounds and for Ajinomoto to produce 30 million pounds. ADM
Little Kona is a small coffee company that is considering entering a market dominated by Big Brew. Each company's profit depends on whether Little Kona enters and whether Big Brew sets a high price or a low price: Little Kona True True or False: Only Little Kona has a dominant strategy in this game. False Big Brew High Price Low Price Enter $2 million, $3 million $2 million, $1 million Don't Enter 50, 58 million $0, $3 million Which of the following outcomes represent a Nash equilibrium in this case? Check all that apply. Big Brew maintains a high price and Little Kona does not enter. Big Brew maintains a low price and Little Kona does not enter. Big Brew maintains a high price and Little Kona enters. Big Brew maintains a low price and Little Kona enters. Big Brew threatens Little Kona by saying, "If you enter, we're going to set a low price, so you had better stay out." Thin True or False: Little Kona should believe the threat.
age Which of the following statements is the best description of a Nash equilibrium? Select one: O a. An equilibrium outcome achieved by cooperation between players in the game b. An outcome that is achieved when players in the game have jointly maximized profits and divided those profits according to market share of each player O c. An outcome where each player's strategy depends on the behaviour of its opponents d. An outcome where each player's best strategy is to maintain its present behaviour given the present behaviour of the other players Next page
Three retail chains are each deciding whether to locate a store in town A or town B. The profit or payoff that a chain receives depends on the town selected and the number of other chains that put stores in that town; see accompanying table. (given) a. Find a symmetric mixed-strategy Nash equilibrium in which chainsrandomize.b. Find all mixed-strategy Nash equilibria in which one of the chains putsa store in town A for sure.c. Find all mixed-strategy Nash equilibria in which one of the chains putsa store in town B for sure.