Exam 13: Game Theory and Competitive Strategy

Scenario 13.1: You are negotiating with your florist over the price of flowers for your wedding. You value the floral arrangements at $500. The florist's cost for the arrangement is $200. You finally settled on a price of $250. -Refer to Scenario 13.1. If your negotiated price had been $350 instead of $250, the sum of consumer surplus and producer surplus would be:

The two largest auto manufacturers, Toyota and GM, have experimented with hydrogen powered cars in the past, and they are currently considering the decision to introduce a hydrogen powered car into the commercial automobile market. The payoffs from the possible actions are measured in millions of dollars per year, and the possible outcomes are summarized in the following game matrix: If both firms enter the market simultaneously, what is the Nash equilibrium?

Scenario 13.16 Consider the pricing game below: -Refer to Scenario 13.16. If the firms must choose their prices simultaneously,

Use the following statements to answer this question: I. A player must have at least one dominant strategy in a game. II. If neither player in a game has a dominant strategy in a game, then there is no equilibrium outcome for the game.

Joanna has a credit card account with Card Bank. Card Bank's available strategies are tp raise Joanna's credit card interest rate or do nothing. Joanna's available strategies are to transfer her Card Bank account balance to another creditor or do nothing. If Card Bank raises Joanna's interest rate and Joanna does nothing, Card Bank increases profits by $1,000 while Joanna receives -$1,000. If Card Bank raises Joanna's interest rate and Joanna transfers her account to another creditor, Card Bank receives -$300 while Joanna receives -$100. If Card Bank does nothing and Joanna does nothing, each player receives $0. If Card Bank does nothing and Joanna transfers her account to another creditor, Card Bank receives -$300 while Joanna receives -$150. Diagram the game tree for this sequential game. Indicate any Nash equilibria.

Scenario 13.1: You are negotiating with your florist over the price of flowers for your wedding. You value the floral arrangements at $500. The florist's cost for the arrangement is $200. You finally settled on a price of $250. -Refer to Scenario 13.1. At your negotiated price your consumer surplus is:

A Nash equilibrium occurs when

BuyRight is a chain of grocery stores operating in small cities throughout the southwestern United States. BuyRight's major competition comes from another chain, Acme Food Stores. Both firms are currently contemplating their advertising strategy for the region. The possible outcomes are illustrated by the payoff matrix below. Entries in the payoff matrix are profits. BuyRight's profit is before the comma, Acme's is after the comma. a. Describe what is meant by a dominant strategy. b. Given the payoff matrix above, does each firm have a dominant strategy? c. Under what circumstances would there be no dominant strategy for one or both firms?

Some popular reality television programs follow people who buy the contents of abandoned storage lockers at public auctions. In most cases, several storeage lockers are sold in sequence during a particular auction. Occassionally, one of the buyers will purposefully bid much more than the expected value of a particular storage locker in order to intimidate the other bidders. What is a plausible explanation for these excessive bids?

Consider the following game that represents the payoffs from different advertising campaigns (low, medium, and high spending) for two political candidates that are running for a particular office. The values in the payoff matrix represent the share of the popular vote earned by each candidate: Under the version of the game in which Candidate A moves first, what is the Nash equilibrium?

A dominant strategy can best be described as

Scenario 13.11 Consider the game below: -What is true about dominant strategies in the game in Scenario 13.11?

Consider the Matching Pennies game: Suppose Player A always uses a pure strategy that selects heads, and Player B always uses a pure strategy that selects tails. Is this outcome a Nash equilibrium?

The strategy that worked best in Axelrod's experiments using the Prisoners' Dilemma game was to

What is true of equilibrium in the game in Scenario 13.14?

Consider the following game that represents the payoffs from different advertising campaigns (low, medium, and high spending) for two political candidates that are running for a particular office. The values in the payoff matrix represent the share of the popular vote earned by each candidate: Under the version of the game with simultaneous moves, what is the Nash equilibrium?

Consider the following game in which two firms decide how much of a homogeneous good to produce. The annual profit payoffs for each firm are stated in the cell of the game matrix, and Firm A's payoffs appear first in the payoff pairs: What are the dominant strategies in this game?

Scenario 13.11 Consider the game below: -What kind of game is shown in Scenario 13.11?

Scenario 13.3 Consider the following game: -Which of the following is true for the game in Scenario 13.3?

The two largest auto manufacturers, Toyota and GM, have experimented with hydrogen powered cars in the past, and they are currently considering the decision to introduce a hydrogen powered car into the commercial automobile market. The payoffs from the possible actions are measured in millions of dollars per year, and the possible outcomes are summarized in the following game matrix: Suppose the Japanese government provides a $15 million subsidy to Toyota if the company delivers a hydrogen powered auto (regardless of GM's action). What is the Nash equilibrium based on the subsidized payoffs?