The action set of player 1 is {1,2, 3, 4, 5} (not considering the $ sign). When both players are rational, the theoretical SPNE is (5, 1). Now answer the following problems. What is the dollar equivalent of utility of happiness to ensure player 2 to accept the 2$ offer of player 1? Just write the number, no need to put the $ sign. 5| What is the dollar equivalent of utility of happiness to ensure player 2 to accept the 4$ offer of player 1? Just write the number, no need to put the $ sign. 100 100
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- Suppose Jimi has reference dependent preferences over guitars and money as in Tversky and Kahneman (1991). His utility functions are given below. Gains Gains 400 -2 -2 2 Guitars 2$ Losses Losses i-600 -2 What is the least amount of money Jimi is willing to accept to sell one of his guitars? (just enter a dollar amount, i.e., "10o0", not "$1000"CENGAGE MINDTAP News Analysis: Go for the Video Bonus While spending the weekend in New York City, Andrew, Beth, and their son, Darnell, are lucky enough to hail the Cash Cab for their taxi ride. During their ride, they win $100 for correct answers and receive only one strike for a wrong answer, so at the end of the ride they are eligible for the video bonus question. Their vacation budget before entering the cab was $400, and based on their understanding of the type of bonus question they'll be asked, they believe they have a 70% chance of getting the question right. As explained in the article, if they answer the video bonus question correctly, they will double their winnings, but if they miss the video bonus question, they will lose all of what they had previously won. Alternatively, they can choose not to play for the bonus and walk away with their winnings from the cab ride. The following graph shows the cab riders' utility as a function of their total vacation budget. For…Consider an agent who has to choose how many donuts to eat. He exhibits the choices C({1, 2}) = {1, 2} and C({1, 2, 3}) = {2, 3}. Can these choices be explained by : (i) maximization of a complete and transitive preference? (ii) satisficing? (iii) regret aversion? %3D
- An agent has income m that can be spent on frequent flier miles f or on other goods – a “composite good” g. Their respective prices are: pf = 10 per mile and pg = 1 per unit. The flier miles have a stepwise price schedule. After the first 25 miles the price is reduced by 20% and after 50 miles the price is further reduced by another 50%.1. Put g on the vertical axis and f on the horizontal axis. Assume m = 200, and draw the budget constraint with all the intercepts and appropriate slopes. 2. On a separate graph, repeat part (1) for m = 300. 3. On a separate graph, repeat part (1) for m = 600.Two players play the Ultimatum Game, in which they are to split $20. A purely rational agent would only reject an offer of … Group of answer choices... -$20 -$19 -$1 -$0 -$10You are considering two options for your next family vacation. You can visit Disney World or Chicago. Your utility from Disney World is 100 if the weather is clear, and 0 if it rains. Chicago is worth a utility of 70 if the weather is clear and a utility of 40 if the weather is rainy. Also assume that the chance of rain at Disney World is going to be 50% and the chance of rain in Chicago is 40%. As a utility maximizer, should you plan to go to Disney World or Chicago? (Explain using relevant equations)
- Two players play the Ultimatum Game, in which they are to split $20. A purely rational agent would only reject an offer of …Mats, who has reference-dependent preferences over beer and money, goes to the local pub with a friend, but is not planning on drinking any beer or spending any of his 50 Euro in cash. Let his end-of-evening outcomes in pints of beer consumed and cash be c1 and c2, respectively, and let his reference point in pints of beer and cash be r1 and r2, respectively. Then, Mats’ utility is given by v(6c1 − 6r1) + v(c2 − r2), where v(x) = x for x ≥ 0, and v(x) = 1.5x for x < 0. (a) Suppose that the price of beer is pB. Calculate Mats’ utility from drinking one pint of beer at this price. What is Mats’ utility from drinking no beer? And, comparing these two utility values, what is the maximum price pB that Mats would pay for one beer? (b) Suppose that Mats unexpectedly gets a pint of beer as part of a promotion at the pub, and incorporates its consumption into his reference point in beer. [Hint: this means that (r1, r2) = (1, 50).] Suppose that Mats could sell the beer at a price pS.…Mats, who has reference-dependent preferences over beer and money, goes to the local pub with a friend, but is not planning on drinking any beer or spending any of his 50 Euro in cash. Let his end-of-evening outcomes in pints of beer consumed and cash be c1 and c2, respectively, and let his reference point in pints of beer and cash be r1 and r2, respectively. Then, Mats’ utility is given by v(6c1 − 6r1) + v(c2 − r2), where v(x) = x for x ≥ 0, and v(x) = 1.5x for x < 0. 1) Now suppose that after Mats gets his promo pint but before he decides whether to sell it, he notices that he lost 10 Euro on the way to the pub. He does not yet incorporate this 10 Euro loss into his reference point for cash. Calculate his selling price for the pint of beer. 2) Suppose that the pub advertises that it will have a 1 Euro/pint promotion. Thinking that this is worth it, Mats plans in advance to buy a pint, and incorporates this plan into his reference point. What is Mats’ reference point (r1, r2) in…
- Suppose a consumer's utility is given by: u (x1, x2) = a/xT + b/x2 Where a= 8, and b = 4 %3D What is the value of MU1 (x1, X2)when x1=9 and x2=8. (Note: The answer may not be a whole number, so round to the nearest hundredth) (Note: The numbers may change between questions, so read carefully)Question-1 It is given that a typical consumer has a well-behaved preference structure for his consumption bundle which includes only two goods, A and B. Further assume that commodity A is normal and commodity B is inferior. By keeping commodity A on the x-axis and commodity B on the y-axis you are required to show the price decomposition for commodity B when $PB increases exogenously relative to $PA. Provide a well-labelled and fully explained-legible diagram.Rick thinks either Morty or Summer broke his TV. Morty and Summer each have to decide simultaneously whether to take the blame or blame the other person. If they both blame the same person (both blame Morty or both blame Summer), the person they blame gets a small punishment and utility of -2, while the blameless person gets a utility of 0. Otherwise (if they both blame the other or both blame themselves), they both get a more severe punishment and a utility of -10.