Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 13, Problem 4P
(a)
To determine
Existence of a dominant strategy for the players.
(b)
To determine
Nash equilibria of the asymmetric game.
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Students have asked these similar questions
Consider the following game: Mercedes-Benz and Honda are the only two firms in the market for automobiles. Each firm has two strategies: produce high-grade vehicles or produce low-grade vehicles. The first entry in the bracket is the payoffs (in $billion) of Mercedes-Benz and the second entry is the payoffs of Honda. (see the image)
What is the dominant strategy of Mercedes-Benz and Honda? Also, what is the Nash equilibrium of this game?
Imagine that there are two snowboard manufacturers (FatSki and WideBoard) in the market. Each firm can either produce ten or twenty snowboards per day. The table below (see attached) shows the profit per snowboard for each firm that will result given the joint production decisions of these two firms.
Draw the game payoff matrix for this situation.
Does either player have a dominant strategy? If so, what is it?
What is the Nash equilibrium solution and how many boards should each player produce each day?
Since FatSki and WideBoard must play this game repeatedly (i.e. make production decisions every day), what strategy would you advise them to play in order to maximize their payoff over the long term?
In the following game, players must move simultaneously. How many Nash equilibria are there? Which will occur without collusion? Which will occur if collusion is allowed?
Firm
A
B
Firm 1
A
3,1
7,0
B
2,4
5,3
Chapter 13 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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