Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 15, Problem 2.1CE
To determine
To describe:The offer recommended as a lead under writer and to whom.
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3. Describe some interaction your company has with another entity (firms producing complementary or substitute products, upstream sup- pliers, or downstream customers), or between internal divisions within your firm that can be described as a sequential or simultaneous game. Diagram the strategies, players, and compute payoffs as best you can. Compute the Nash equilibria. What can you do to change the rules of the game to your advantage? Compute the profit consequences of your advice.
Please answer the GAME THEORY problem solving under Operation Research/Management. Thanks
This is a Microeconomics problem. I need help for part (d).
Two firms A and B operating in the same market must choose between a collude price and a cheat price.
Answer the following questions in order.
(a) Does Firm A have a dominant strategy? Explain your answer.
(b) Does Firm B have a dominant strategy? Explain your answer.
(c) Is there an equilibrium solution to the above game?
(d) Is this equilibrium solution to the game the most "ideal" outcome for the players? Explain clearly why or why not.
Chapter 15 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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- 15. Match the description provided in the bank of options with the appropriate concept in the second table. Bank of options Letter A Consumers agree X is prefered to Y when both have equal prices Consumer preferences are changed Consumers obtain more information about product characteristics Consumers are targeted with advertising Characteristic that is consumed as complementary to product itself One time cost to enter an industry changes when the market size increases A firm that is a leader obtains a higher profit in a dynamic game One time cost to enter an industry is treated as a parameter of model A firm that is a follower obtains a higher profit in a dynamic game Consumers do not agree X is prefered to Y when both have equal prices Industry with monopoly and perfect competition characteristics An empirical model used to estimate product differentiation В C E F G H I J K Concept Second mover advantage First mover advantage Vertical product differentiation Horizontal product…arrow_forwardPlease solve the attached OPERATION RESEARCH problem with a topic of GAME THEORY as per attached file. Thanksarrow_forwardThis is a Microeconomics problem. Two firms A and B operating in the same market must choose between a collude price and a cheat price. Answer the following questions in order. (a) Does Firm A have a dominant strategy? Explain your answer. (b) Does Firm B have a dominant strategy? Explain your answer. (c) Is there an equilibrium solution to the above game? (d) Is this equilibrium solution to the game the most "ideal" outcome for the players? Explain clearly why or why not.arrow_forward
- (a) Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl- Hirschman index of 2,765. Case's share of that market was 22 percent, while Fiat comprised just 12 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase?arrow_forwardTwo takeaway restaurants, ChipAhoy and FishDish, compete for business in a small seaside town. The manager of ChipAhoy has engaged you to advise on the pricing of its main offering, a fish & chips supper. Your intention is to analyse the situation as a twoplayer competitive game. After making background investigations, you have decided to adopt the following assumptions in your analysis. A1 The cost of the producing and serving a portion of fish & chips is the same for both restaurants: £3.50.A2 In a typical week, holidaymakers buy a total of 1500 portions of fish & chips, and local residents buy 1000 portions.A3 Local residents always choose the restaurant with the lower price. If prices are the same at the two restaurants, their custom is divided equally between the two. A4 Holidaymakers divide their custom 50:50 between the two restaurants, irrespective of the prices. Derive the Nash equilibrium/equilibria for the gamearrow_forwardEconomists make use of the tools of Game Theory because: It helps to analyse interactions between humans It makes them better in playing card games It offers a better understanding of oligopolies It is highly mathematical a. All of the above are true b. (1) and (2) are true c. (1) and (3) are true d. (3) and (4) are truearrow_forward
- CNG Pipeline Company At the weekly brainstorming session, John Spychalski, president of CNG Pipeline Company (CNG), suggested that they build a new pipeline from Elizabeth, New Jersey, to the Midwest to move refined petroleum products, gasoline, and diesel fuel. Following some discussion, he asked the strategic planning group to consider the idea before the next brown-bag session. Skip Grenoble, vice president for strategic planning, thought that John was not con- sidering the cost and impact of this idea. How could CNG obtain land to build the pipe- line, let alone obtain the necessary capital to finance the project? Then there was the question of the existing refineries located in Ohio, Indiana, and Illinois. Skip knew refined petroleum products were being transported from the Gulf of Mexico refineries via barge and pipeline to the Midwest market areas currently. Skip turned over the project to Evelyn Thomchick, chief strategy analyst, to develop a preliminary analysis of the…arrow_forwardPlayer B Strategy 1 2 Player A Strategy 1 $2,400, $1,200 -$1,200, -$2,400 2 -$2,400, -$1,200 $1,200, $2,400 Does Player A have a dominant strategy? Yes or no? Does player B have a dominant startegy? Yes or No?arrow_forwardAnalyze the pure Nash equilibrium and mixed Nash equilibrium strategies in the following manufacturer–distributor coordination game. How would you recommend restructuring the game to secure higher expected profit for the manufacturer?arrow_forward
- The definition of Game Theory is: Game Theory is a field of mathematics that analyzes strategic-interaction between rational, self-interested players. Give an example of a situation that can be considered a game from the perspective of game theory. You can choose this example from your experience or you can consider a hypothetical scenario. Use your own imagination and make sure this is not any famous or known example used in game theory. 1. What is happening in this game? 2. Who are the players in this game? 3. What are the possible actions for each player? 4. Represent the game in normal form with the utilities you have mentioned in the description of the game. 5. Justify the utilities you have assigned. 6. Find the best responses of each player.arrow_forwardA game theory problem: Two lawyers, Elizabeth Hasenpeffer (EH) and Joseph Fargillio (JF) decide on one of two legal strategies: A and B for EH, / and // for JF. They then write a brief and submit them simultaneously to three judges (X, Y, and Z) Suppose, at the start of the game, it is known by all that Judge Z will read only the brief of Ms. Hasenpeffer. Required: Write down the corresponding extensive form game. You may exclude payoffs.arrow_forwardc) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A’s payoff/Firm B’s payoff)Firm BFirm APrice £2 Price £1Price £2 £10,000/£10,000 £5,000/£12,000Price £1 £12,000/£5,000 £6,000/£6,000Assume you are the pricing manager at Firm A;9i) What is your payoff for a ‘maximin’ strategy?ii) What is your payoff for a ‘maximax’ strategy? iii) Does a dominant strategy exist within this prisoners’ dilemma?arrow_forward
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