Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 8P
To determine
Equilibrium in a reverse trust game. Also, determine the difference in the process from the original trust game.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Amir and Beatrice play the following game. Amir offers an amount of money z € [0, 1] to
Beatrice. Beatrice can either accept or reject. If Beatrice accepts, then Amir receives 1 - z
dollars and Beatrice receives a dollars. If Beatrice rejects, then both receive no money. As in
the Ultimatum Game, Amir cares only about maximizing the amount of money he receives.
Beatrice, on the other hand, detests Amir, and therefore cares about the amount of money
that both receive: if Amir receives y dollars and Beatrice receives a dollars, then Beatrice's
payoff is a-ay where a > 0.
(a) Find all pure strategy Nash equilibria of the game in which the two players choose
simultaneously (thus Beatrice accepts or rejects without seeing Amir's offer).
Solution: The NE are the strategy profiles in which Beatrice rejects and Amir's offer a
satisfies 2-a(1-x) ≤0, i.e. r ≤a/(1+a).
(b) Find all subgame perfect equilibria of the sequential game in which Amir first makes the
offer and Beatrice observes the offer…
Consider the following game:
Player 1 chooses A, B, or C.
If player 1 chooses A, the game ends and
each player gets a payoff of $7.
If player 1 chooses B, then player 2 observes
their choice and plays X or Y.
If player 1 chooses B and player 2 chooses X,
the game ends. Player 1 gets a payoff of $14
and player 2 gets a payoff of $16.
If player 1 chooses B and player 2 chooses Y,
the game ends. Player 1 gets a payoff of $17
and player 2 gets a payoff of $14.
If player 1 chooses Č, then player 2 chooses
secretly to put either a $5 bill or a $20 bill into
a sealed envelope. Player 1 does not observe
his choice; rather she has two options:
Open the envelope and gets whatever bill is
inside. If she chooses this, player 2 gets
nothing.
Give the envelope back to player 2, and get
$12 for sure. If she chooses this, player 2 gets
the amount in the envelope.
Draw the game tree for this game
How many strategies does Player 1 have in
this game?
Ashley loves hanging out at the mall (payoff of 100) and hates hockey (payoff of -100). Joe loves hockey (payoff of 100) and hates hanging out at the mall (payoff of - 100). But both Ashley and Joe prefer to go out together (bonus payoff of 100 each in addition to the payoff from the activity they choose). If they go out separately, they get no bonus payoff. Complete the payoff matrix for Ashley and Joe. >>> If the answer is negative, include a minus sign. If the answer is positive, do not include a plus sign.
Chapter 18 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
Knowledge Booster
Similar questions
- Consider the “trust game” discussed in class. The first player starts with a $100 endowment and chooses how much to give to the second player. The gift triples in value (i.e. if $20 is given, the second player receives $60). The second player then chooses how much to give back. The first player receives exactly how much is returned (i.e. if $40 is returned, the first player receives $40). The Nash equilibrium of the game is: Group of answer choices: -First player gives $100, second player returns nothing. -First player gives $50, second player returns $50. -First player gives $100, second player returns $300. -There is no Nash equilibrium of this game. -First player gives nothing, second player returns nothing.arrow_forwardConsider a game where player A moves first, choosing between Left and Right. Then, after observing player A’s choice, player B moves next choosing between Up and Down. Which of the following is true? This is a game where players A and B have the same number of strategies. Player A will get a higher payoff than player B as A moves first. This is game will only have one Nash equilibrium. This is a game of perfect information.arrow_forwardSuppose you were playing the Split or Steal game for a jackpot of $100,000. Which would you choose: Split or Steal? Explain whyarrow_forward
- Some collector has a painting that he no longer values. However, there are two buyers that would be happy to acquire it. Buyer 1 assigns a value of $900 to the painting, and buyer 2 of $1,000. Explain that this situation can be represented as a cooperative game with transferable utility. Obtain the set of players and write down the characteristic function (supposing that the grand coalition’s value is $1000). Find the Core and the Shapley value of the game.arrow_forwardTinky Winky and Dipsy both choose to play an action, and the payoff from that choice is dependent on what the other player chooses. Both players choose their actions simultaneously and reveal their choice to each other at the same time. Tinky-Winky Jump Punch Tinky-Winky gets payoff Tinky-Winky gets payoff Kick Dipsy Dipsy gets payoff Dipsy gets payoff Tinky-Winky gets payoff Tinky-Winky gets payoff Duck 4. Dipsy gets Dipsy gets payoff payoff 10 Which of the following statements is true? O This game does not have any Nash equilibria. O There is more than one Nash equilibrium in this game. O The only Nash equilibrium of this game is Dipsy playing "Kick" and Tinky-Winky playing "Jump" O The only Nash equilibrium of this game is Dipsy playing "Duck" and Tinky-Winky playing "Punch O The only Nash equilibrium of this game is Dipsy playing "Kick" and Tinky-Winky playing "Punch" O The only Nash equilibrium of this game is Dipsy playing "Duck" and Tinky-Winky playing "Jump"arrow_forwardIn 'the dictator' game, one player (the dictator) chooses how to divide a pot of $10 between herself and another player (the recipient). The recipient does not have an opportunity to reject the proposed distribution. As such, if the dictator only cares about how much money she makes, she should keep all $10 for herself and give the recipient nothing. However, when economists conduct experiments with the dictator game, they find that dictators often offer strictly positive amounts to the recipients. Are dictators behaving irrationally in these experiments? Whether you think they are or not, your response should try to provide an explanation for the behavior.arrow_forward
- Suppose that you and a friend play a matching pennies game in which each of you uncovers a penny. If both pennies show heads or both show tails, you keep both. If one shows heads and the other shows tails, your friend keeps them. Show the pay- off matrix. What, if any, is the pure-strategy Nash equilibrium to this game? Is there a mixed-strategy Nash equilibrium? If so, what is it?arrow_forwardWe have a group of three friends: Kramer, Jerry and Elaine. Kramer has a $10 banknote that he will auction off, and Jerry and Elaine will be bidding for it. Jerry and Elaine have to submit their bids to Kramer privately, both at the same time. We assume that both Jerry and Elaine only have $2 that day, and the available strategies to each one of them are to bid either$0, $1 or $2. Whoever places the highest bid, wins the $10 banknote. In case of a tie (that is, if Jerry and Elaine submit the same bid), each one of them gets $5. Regardless of who wins the auction, each bidder has to pay to Kramer whatever he or she bid. Does Jerry have any strictly dominant strategy? Does Elaine?arrow_forwardWe have a group of three friends: Kramer, Jerry and Elaine. Kramer has a $10 banknote that he will auction off, and Jerry and Elaine will be bidding for it. Jerry and Elaine have to submit their bids to Kramer privately, both at the same time. We assume that both Jerry and Elaine only have $2 that day, and the available strategies to each one of them are to bid either$0, $1 or $2. Whoever places the highest bid, wins the $10 banknote. In case of a tie (that is, if Jerry and Elaine submit the same bid), each one of them gets $5. Regardless of who wins the auction, each bidder has to pay to Kramer whatever he or she bid. Does this game have a Nash Equilibrium? (If not, why not? If yes, what is the Nash Equilibrium?)arrow_forward
- Consider a normal form game in which player 1 has three strategies, A1, B1, C1 and player 2 has three strategies, A2, B2, C2. Suppose that A1 is a best response to B2, B1 is a best response to A2, A2 is a best response to B1, and B2 is a best response to A1. Do we know with certainty whether A1 is rationalizable or not?arrow_forwardConsider a game between 2 payers (Ann and Bill) where each chooses between 3 actions (Up, Middle and Down). 1) Create a payoff matrix that reflects this. 2) Fill in payoff numbers that makes this game a Prisoner's Dilemma. 3) Explain why your game is a Prisoner's Dilemma.arrow_forwardConsider the following story: Charlie finds two fifty-pence pieces on the floor. His friend Dylan is standing next to him when he finds them. Chris can offer Dylan nothing at all, one of the fifty-pence pieces, or both. Dylan observes the offer made by Charlie, and can either accept the offer (in which case they each receive the split specified by Charlie) or reject the offer.If he rejects the offer, each player gets nothing at all (because Charlie is embarassed and throws the moneyaway).(a) Formulate this interaction as an extensive-form game. To keep things simple, players’ payoff is equal to their monetary gain.(b) List all histories of the game. Split these into terminal and non-terminal histories.(c) What are the strategies available to Charlie? What are the strategies available to Dylan? Draw the strategic-form game.(d) Find the pure-strategy Nash equilibria of this game.(e) What do you think will happen?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning