Suppose that A and B benefits changed based on whether or not they work together. Imagine they are negotiating over a lease on some office space. In this case A and B would gain more from having the office space all to itself. Say, A's benefit from leasing the offices on its own is 100 while its benefit from sharing the offices with B is only 85. Similarly, B's benefit from leasing the offices on its own is 200 while its benefit from sharing the offices with A is only 175. How then do we calculate how much each party should pay when they work together? Let's go through the example when the cost is 100. We first want to calculate the pie. The pie is a. 15 b. 35 c. 50 d. 80 e. None of the above

You play the following bargaining game. Player A moves first and makes Player B an offer for the division of $1000. (For example, Player A could suggest that she take $600 and Player B take $400.) Player B can accept or reject the offer. If he rejects it, the amount of money available drops to $800, and he then makes an offer for the division of this amount. If Player A rejects this offer, the amount of money drops to $700 and Player A makes an offer for its division. If Player B rejects this offer, the amount of money drops to $0 and player A keeps the $700. Both players are rational, fully informed, and want to maximize their payoffs. Which player will do best in this game? Assume that monetary divisions must take the form of dollars (rather than cents or smaller denominations) and, in each round, a player will offer at least $1. The player that will do best in this game is because when following his optimal strategy he should receive a payoff of $ (Enter a numeric response using an…

Suppose that the St Clair river, which flows along the border between Ontario and Michigan, becomes polluted and needs to be cleaned. The American and Canadian governments need to make a decision on whether to clean the river or not. They must make this decision simultaneously. If both countries invest in cleaning the river, they each get a payoff of 871. If one country invests in cleaning the river, but the other one doesn't, the country that spends the money on the cleanup gets a payoff of 161, while the other country gets to enjoy the benefits of the clean river without having to spend any money, and therefore gets a payoff of 1159. If neither country invests in cleaning the river, they must both deal with the consequences of the pollution, and they each get a payoff of -639. Suppose that the U.S. and Canada are again making decisions simultaneously. Find the Nash Equilibrium in mixed strategies. In the mixed strategy Nash Equilibrium, what is the probability that Canada invests in…

Rod and Todd Flanders have been working jobs in HR that pay $40,000 and $20,000 per year, respectively. They are trying to decide whether to quit their jobs and jointly open a snow cone shack, which they estimate can earn $100,000 per year. According to the Nonstrategic view of bargaining, how will the snow cone shack proceeds be split? Rod and Todd Flanders have been working jobs in HR that pay $40,000 and $20,000 per year, respectively. They are trying to decide whether to quit their jobs and jointly open a snow cone shack, which they estimate can earn $100,000 per year. According to the Nonstrategic view of bargaining, how will the snow cone shack proceeds be split? Rod gets $50,000 and Todd gets $50,000 Rod gets $66,666.67 and Todd gets $33,333.33 they won't quit their jobs. Rod gets $60,000 and Todd gets $40,000

Question 4 A bus is crowded for travel during peak hours. During such travel hours two daily passengers ‘Ali’ and ‘Hassan’ enter the Metro. Luckily, two adjacent seats are free in the bus. Each of them must decide whether to sit or stand. For both, sitting alone is more comfortable than sitting next to the other person, which in turn is more comfortable than standing.(Note: for all parts below consider Ali as ‘row player’ and Hassan as ‘column player’. Take the game as a simultaneous game NOT sequential). Show ALL steps and working in support to your answersa) Assume that both ‘Ali’ and ‘Hassan’ are altruistic, ranking outcomes according to the other person’s comfort and, out of politeness, prefer to stand than to sit if the other person stands. Model the situation as a strategic game b) Find any Nash equilibrium (equilibria) if it exists. c) Does a dominant strategy exist for either ‘Ali’ or ‘Hassan’ with these preferences?

6,7

Suppose that there are two competing types of high-definition DVD players, Greenbeam and Mosdef, and each uses a different format. The DVD players are subject to network externalities: the more people who use one type of player, the more production companies adopt that particular format for their movies, and the greater the value of that player to each user. Greenbeam and Mosdef entered the market at around the same time. Which of the following is likely to happen if Greenbeam sells its DVD players at its profit-maximizing price, but Mosdef sells its DVD players at a much lower price than Greenbeam's at the early stages? O Mosdef will dominate the market for high-definition DVD players. O Greenbeam will dominate the market for high-definition DVD players. Greenbeam and Mosdef will have equal market shares. O Neither Greenbeam nor Mosdef will succeed, and a new company could easily enter and dominate the market. OO

Janeek and Raj are the only two growers who provide organically grown com to a local grocery store. They know that if they cooperated and produced less com, they could raise the price of the corn. If they work independently, they will each earn $100. If they decide to work together and both lower their output, they can each earn $150. if one person lowers output and the other does not, the person who lowers output will earn $0 and the other person will capture the entire market and will earn $200. Reference the game illustrated below where the first payout in each cell is for Janeek and the second is for Raj. (J.R) Independent Cooperate Independent ($100, $100) ($0, $200) What is the Nash Equilibrium for this game? Ⓒ(Cooperate, Cooperate) (Cooperate, Independent) (Independent, Cooperate) (Independent, Independent) Cooperate ($200, 50) ($150, $150)

Economics: Industrial Economics Question: 1 Consider the following simultaneous move game: Player 1 selects rows and player 2 selects columns in a simultaneous move game. For every outcome, payoffs for player 1 are given by the first entry and payoffs for player 2 by the second. P1\P2 | A | B | C | D | 1 | (5,5) | (7,4)  | (7,5) | (1,2) | 2 | (7,2) | (7,3) | (5,1) | (2,3) | 3 | (1,2) | (6,9) | (8,0) | (8,8) |   The Nash Equilibrium is: Choices: A. (2,B) B. (3,D) C. (3,B) D. (1,C)   Question: 2 In the patent pooling model, if there are four inputs that are required for production of the final goods and each one is produced by a patent-holding monopolist then 1. At the Nash Equilibrium the Lerner Index for the industry isChoices: A. Half as high as the Lerner index that would arise...B. Twice as high as the Lerner Index that would arise...C. Four times higher than the Lerner Index that we...D. Four times lower than the Lerner Index that we... 2. If the market for the final good were a…

The author describes the case of the "Prisoner's Dilemma" to demonstrate which of the following?   Competition and the pursuit of unfettered self-interest result in greater efficiency, and benefits everyone involved equally.     Effective policy can place incentives in such a manner that the very pursuit of unfettered self-interest of the prisoners results in the desired outcome of getting both to confess to the crime.     Just as in the case of the prisoner's dilemma, the pursuit of unfettered self-interest will cause the fishermen who fish Atlantic swordfish (a common resource) to harvest them wisely and limit the number of fish each fisherman catches. Thus the fishermen's ability to pursue unfettered self-interest will allow the population of swordfish to remain stable and even grow. The fishermen trust each other to behave responsibly and in the interest of the common good.