Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 8, Problem 4DQ
To determine
The connection between the heuristics and the bad publicity.
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4. Consider a three-player bargaining, where the players are negotiating over
a surplus of one unit of utility. The game begins with player 1 proposing
a three-way split of the surplus. Then player 2 must decide whether to
accept the proposal or to substitute for player 1's proposal his own alternative
proposal. Finally, player 3 must decide whether to accept or reject current
proposal (it is player 1's if player 2 accepts or player 2's if player 2 offer a
new one). If he accepts, then the players obtain the specified shares of the
surplus. If player 3 rejects, then the players each get 0.
(a) Draw the extensive form game of this perfect-information game.
(b) Determine the subgame perfect NE.
Consider a market for used computer printers, where
buyers value good ones at $1,000 and bad ones at $760.
Sellers value good ones at $910 and bad printers at $690.
Sellers can attach a warranty at cost of $20 per month for
good ones and $45 for bad ones. What is the minimum
number of month necessary in order for the seller of good
printers to be able to signal her type?
O 5
1 9
O 11
Newfoundland’s fishing industry has recently declined sharply due to overfish- ing, even though fishing companies were supposedly bound by a quota agree- ment. If all fishermen had abided by the agreement, yields could have been maintained at high levels. LO4
Model this situation as a prisoner’s dilemma in which the players are Company A and Company B and the strategies are to keep the quota and break the quota. Include appropriate payoffs in the matrix. Explain why overfishing is inevitable in the absence of effective enforcement of the quota agreement.
Provide another environmental example of a prisoner’s dilemma.
In many potential prisoner’s dilemmas, a way out of the dilemma for a would-be cooperator is to make reliable character judgments about the trustworthiness of potential partners. Explain why this solution is not avail-
able in many situations involving degradation of the environment.
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- (Butterworth) Mrs. Butterworth Maple Syrup budgets its marketing efforts using competitive parity. Its current market share and share of voice are both 42%. With the release of a new cannabis- Infused flavor, Mrs. Butterworth wants to get its market share even higher. If Mrs. Butterworth wants to increase its market share to 48%, how many additional share of voice points do they need? O 12 O75 O 10.5arrow_forwardSuppose we have another firm known as the Sanda Corporation which makes a product known as "Delgados". Suppose that its FC=$2,000 and its TC=$5,000 and its AVC=$48. What is the ATC? O $20.50 O $70 O $80 O $100 O Not enough informationarrow_forward5. The following represents the payoffs in a one period game in prices HI and LO. A HI LOW B HI (100, 100) (200,0) LOW (0, 200) (50, 50) (a) If A and B were playing this game only once, what strategy should A choose, and why? (b) A and B are playing the same game an infinite number of times and each has a discount rate of 50% (.50). Firm B adopts a trigger strategy and selects HI in the first round. What would be A's present value of profits from cooperation (HI)? What would be its present value from cheating (LO)? Would A choose to cooperate or cheat?arrow_forward
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