EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 13, Problem 11SP
To determine
Dominant strategy and the BBT show.
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Use the following normal-form game to answer the following questions. a. For what values of x is strategy D (strictly) dominant for player 2? b. For what values of x is strategy B (strictly) dominant for player 1? c. For what values of x is (B, D) the only Nash equilibrium of the game?
In game theory, what are some conflicts (history/fiction) in which there is a nash equilibrium between 2 actors?
In business, sports, politics, and many other fields there are probably countless situations akin to the prisoner's dilemma where players acting in their own self-interest do not produce an ideal outcome. Likewise, some player dynamics also illustrate other game theory concepts like a game of chicken, credible threats/commitments, and other similar concepts. Use at least one article from The Wall Street Journal to discuss a strategic situation between players that resembled or used any of the concepts above. What could have any of the players done differently to achieve a better outcome?
Chapter 13 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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- Is the solution to the prisoner’s dilemma game a Nash equilibrium? Why? The solution to the prisoner’s dilemma game is a Nash equilibrium because no player can improve his or her payoff by changing strategy unilaterally. The solution to the prisoner’s dilemma game is not a Nash equilibrium because players do not end up in the best combination for both. The solution to the prisoner’s dilemma game is not a Nash equilibrium because both players can improve their payoffs by cooperating. The solution to the prisoner’s dilemma game is a Nash equilibrium because it is a noncooperative game in which both players have to expect that the other is purely selfish.arrow_forwardConsider the following dynamic game: Find the subgame perfect Nash Equilibrium Identify the non-credible threat equilibriumarrow_forwardSuppose two players play the prisoners' dilemma game a finite number of times, both players are rational, and the game is played with complete information, is a tit-for-tat strategy optimal in this case? Explain using your own words.arrow_forward
- Table 15.4, Prisoner Dilemma. Suppose the game starts with both Jesse and Frank planning to “Stay Mum” in the lower right cell. Discuss how each player would evaluate the situation and decide whether to change decisions. If each player makes decisions to minimize the penalty, in which cell will this game end? Is there a Nash equilibrium?arrow_forwardThe prisoner's dilemma shown displays the payoffs associated with two firms: Firm A and Firm B. These firms are in an oligopoly and they can choose to either collude or compete. FIRM B Collude Produce 20m Compete Produce 50m Collude Produce 30m B: $300m profits A: $200m profits Given the payoffs in this matrix, Firm A: B: $400m profits FIRM A A: $50m profits 1. does not have a dominant stratgegy 2. has a dominant strategy to compete 3. has a dominant strategy to collude 4. none of these are true Compete Produce 35m A: $300m profits B: $170m profits A: $100m profits B: $200m profitsarrow_forwardFill in the chart attached and answer the following questions: a) Bert's dominant strategy is to: (pick the correct answer below ) - no dominant strategy - fish for 20 hours per week -fish for 40 hours per week. b) Ernie's dominant strategy is to: ( pick the correct answer below) - no dominant strategy - fish for 20 hours per week -fish for 40 hours per week. c) Is there a Nash Equilibrium? ( pick the correct answer below) - No - Yes, both fish for 20 hours per week - Yes, one fisher for 40 and the other for 20. - Yes both fish for 30 hours per week. d) Is there an incentive for Bert and Ernie to collude? Why or why not?arrow_forward
- Consider the following game where two players have to decide if they want to buy a movie ticket or a baseball ticket. They have the highest payoffs when they both buy tickets to the same activity, but must decide simultaneously what to buy without knowing what the other person will do. a. Does either player have a dominant strategy? b. How many equilibria does this game have? c. Is this an example of a prisoner’s dilemma? Explain. d. What will be the outcome if your friend buys their ticket first and you can observe their choice?arrow_forwardThe following is a static game: Convert this game into dynamic form game. Find the Nash equilibrium and subgame perfect Nash equilibrium of this game. If you consider this game as dynamic then what kind of dynamic game is this.arrow_forwardEconomics Alpha and Beta are the only firms selling gyros in the upscale town of Delphi. Each firm must decide on whether to offer a discount to students to compete for customers. If one firm offers a discount but the other does not then the firm that offers the discount will increase its profit. The figure shows the payoff matrix for this game. Alpha Offer Don't offer Alpha eams S60,000 Alpha eams $20,000 What is the Nash equilibrium in this game? Offer Bota earns $60,000 Bota earns $100.000 O A. There is no Nash equilibrium Beta Alpha earns $100.000 Alpha earms $80,000 O B. Beta offers a student discount but Alpha does not Don't OC. Both Alpha and Beta offer a student discount Beta eams $20,000 Beta earns $80,000 offer O D. Alpha offers a student discount but Beta does notarrow_forward
- How Game theory really works in the world of Oligopoly?arrow_forwardConsider the 2-player, zero-sum game "Rock, Paper, Scissors". Each player chooses one of 3 strategies: rock, paper, or scissors. Then, both players reveal their choices. The outcome is determined as follows. If both players choose the same strategy, neither player wins or loses anything. Otherwise: "paper covers rock": if one player chooses paper and the other chooses rock, the player who chose paper wins and is paid 1 by the other player. "scissors cut paper": if one player chooses scissors and the other chooses paper, the player who chose scissors wins and is paid 1 by the other player. "rock breaks scissors": if one player chooses rock and the other player chooses scissors, the player who chose rock wins and is paid 1 by the other player. We can write the payoff matrix for this game as follows: rock paper scissors rock 0 paper 1 0 scissors 2. Suppose now we alter the game so that whenever Colin chooses "paper" the loser pays the winner 3 instead of 1: rock paper scissors rock 0…arrow_forwardIn game theory, a "payoff matrix" is a table that shows the following, except Multiple Choice the profits to each firm or player that would result from various strategy combinations. the target payoffs that each firm or player is aiming for in their different strategies. the interdependence of the firms’ or players’ profits, based on their alternative actions. the alternative results that the firms or players would get, based on their actions and those of others.arrow_forward
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