Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 13, Problem 4Q
To determine
Meaning of Nash equilibrium and its difference from dominant strategy equilibrium.
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Consider the following extensive form game:
Find the Nash equilibrium
Find subgame perfect Nash Equilibrium
Explain why all Nash equilibriums are not subgame perfect
What is the difference, if any, between a dominant strategy and a Nash equilibrium? Give examples.
why is a nash equilibrium stable
Chapter 13 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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- What is the distinctive characteristic of the Nash equilibrium?arrow_forwardIn the table below, it can be stated that it is the Nash Equilibrium: Regarding the game described by the matrix of possibilities below, it can be stated that the pair constitutes a Nash equilibrium: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_forward
- Imagine a small town with three car repair shops competing for a limited number of customers. Explain why the three shops working together to keep their prices high is unlikely to be a Nash equilibrium.arrow_forwardDefine a dominant strategy and Nash equilibrium. Can two firms interacting with each other have no Nash equilibria if both have a dominant strategy?arrow_forwardYou have just played rock, paper, scissors with your friend. You chose scissors and he chose paper, so you won. Is this a Nash equilibrium? Explain why or why not.arrow_forward
- Find any Nash equilibria in the game below. Firm B Co-operate Don’t co-operate Firm A Co-operate 60 60 0 80 Don’t co-operate 80 0 10 10 Answer a. There is one Nash equilibrium: both firms don't co-operate. b. There are no Nash equilibria. c. There are two Nash equilibria: one firm co-operates and the other firm doesn't co-operate. d. There are two Nash equilibria: (i) both firms co-operate and (ii) both firms don't co-operate.arrow_forwardWhat is game theory? How does it relate to strategic decision making? What do the phrases dominant strategy and Nash Equilibrium mean as they apply to game theory?arrow_forwardFind any Nash equilibria in the game below. Firm B Co-operate Don’t co-operate Firm A Co-operate 60 60 0 80 Don’t co-operate 80 0 10 10 a. There is one Nash equilibrium: both firms don't co-operate. b. There are no Nash equilibria. c. There are two Nash equilibria: one firm co-operates and the other firm doesn't co-operate. d. There are two Nash equilibria: (i) both firms co-operate and (ii) both firms don't co-operate.arrow_forward
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