Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Chapter 20, Problem 11QE
To determine
Check the statement whether it is true or false.
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True or false? If a game has a Nash equilibrium, that equilibrium will be the equilibrium that we expect to observe in the real world.
False. People don’t always act in the way that a Nash equilibrium requires. People don’t always make the necessary calculations and they take into account the outcome of others.
False. A Nash equilibrium is based on very strict assumptions that rarely hold in the real world. No real-world situation leads to a Nash equilibrium.
True. As long as people are rational and have their own self-interest at heart, real-life games will result in the Nash equilibrium.
True. Nash’s theory of equilibrium outcomes was derived from real-world interactions. The theory holds true for almost all real-world scenarios.
The 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.
You 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.
Chapter 20 Solutions
Microeconomics
Ch. 20.1 - Prob. 1QCh. 20.1 - Prob. 2QCh. 20.1 - Prob. 3QCh. 20.1 - Prob. 4QCh. 20.1 - Prob. 5QCh. 20.1 - Prob. 6QCh. 20.1 - Prob. 7QCh. 20.1 - Prob. 8QCh. 20.1 - Prob. 9QCh. 20.1 - Prob. 10Q
Ch. 20.A - Netflix and Hulu each expects profit to rise by...Ch. 20.A - Prob. 2QECh. 20 - Prob. 1QECh. 20 - Prob. 2QECh. 20 - Prob. 3QECh. 20 - Prob. 4QECh. 20 - Prob. 5QECh. 20 - Prob. 6QECh. 20 - Prob. 7QECh. 20 - Prob. 8QECh. 20 - Prob. 9QECh. 20 - Prob. 10QECh. 20 - Prob. 11QECh. 20 - Prob. 12QECh. 20 - Prob. 13QECh. 20 - Prob. 14QECh. 20 - Prob. 15QECh. 20 - Prob. 16QECh. 20 - Prob. 1QAPCh. 20 - Prob. 2QAPCh. 20 - Prob. 3QAPCh. 20 - Prob. 4QAPCh. 20 - Prob. 5QAPCh. 20 - Prob. 6QAPCh. 20 - Prob. 1IPCh. 20 - Prob. 2IPCh. 20 - Prob. 3IPCh. 20 - Prob. 4IPCh. 20 - Prob. 5IPCh. 20 - Prob. 6IPCh. 20 - Prob. 7IP
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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 perfectarrow_forwardIn game theory, what is a subgame? What is a subgame-perfect Nash equilibrium? If possible, could you please provide an example? Thank you!arrow_forwardIs 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_forward
- Nash equilibrium refers to the optimal outcome of a game where there is no incentive for the players to deviate from their initial strategy. An individual (or player) can receive no incremental benefit from changing actions, assuming other players remain constant in their strategies. Given this premise, can there be a no Nash equilibrium?arrow_forwardwhy is a nash equilibrium stablearrow_forwardUsing game theory what are some examples in where Nash equilibrium is incorporated?arrow_forward
- What 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_forwardhow do you describe the pure Nash equilibrium of a game, listing all equilibrium conditions.arrow_forwardConsider the following game: PLAYER 2 Left Middle Right Up 0,0 2,5 5.4 PLAYER 1 Middle 1,2 7,3 4,3 Down 5,5 3, 1 2, 1 Which of the following statements is true? There are two Nash equilibria, and they are both Pareto efficient. There is a unique Nash equilibrium. There are two Nash equilibria, and they are both Pareto inefficient. There are two Nash equilibria, but only one is Pareto efficient. None of these.arrow_forward
- From your own understanding on the concept of “Game Theory”, what can you conclude about the relationship between rules of the game and the outcome that results?arrow_forwardChris Evans Party Don't Party Paparazzo Stalk 3,4 1,1 Don't Stalk 4,2 1,2 Suppose a sequential game in which Paparazzo moves first. What is the subgame perfect Nash equilibrium? (Stalk; Party if Paparazzo chooses Stalk, and Party if Paparazzo chooses Don't Stalk). (Stalk; Party if Paparazzo chooses Stalk, and Don't Party if Paparazzo chooses Don't Stalk). O (Don't Stalk; Party if Paparazzo chooses Stalk, and Party if Paparazzo chooses Don't Stalk). (Don't Stalk; Party if Paparazzo chooses Stalk, and Don't Party if Paparazzo chooses Don't Stalk).arrow_forwardDefine game theory.arrow_forward
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