Exam 8: Game Theory and Oligopoly

Mario's Pizza wants to prevent Angelo's Pizza from entering the pizza delivery market. If Mario's Pizza advertises that it will always undercut any competitor's price, the effect of advertising ______Mario's Pizza's profits due to its cost and ______Mario's Pizza's profits due to a(n)______ In its demand.

Happy Feet wants to prevent Best Nails from entering the nail salon market. The above game tree illustrates the different stra and corresponding payoffs for the two firms. Both Happy Feet and Best Nails have the same strategies of advertising (Ad) or advertising (No Ad). The payoffs represent net profit in millions. -If Happy Feet chooses to Ad and Best Nails then chooses to Ad, Happy Feet earns _ million in net profit and Best Nails earns million.

-Refer to the payoff matrix above. Which of the following is true for Best Lights?

Happy Feet wants to prevent Best Nails from entering the nail salon market. The above game tree illustrates the different stra and corresponding payoffs for the two firms. Both Happy Feet and Best Nails have the same strategies of advertising (Ad) or advertising (No Ad). The payoffs represent net profit in millions. -The Nash equilibrium of this game is for Happy Feet to and Best Nails to .

All else equal, the greater the cost of a commitment to prevent a rival firm from entering the market, the less likely the commitment will be undertaken.

Most games that managers face are one- shot games.

If two players are in a finitely repeated game and both players know the final period, cooperation is not possible due to the end- period problem.

A mixed- strategy Nash equilibrium is the outcome in which a player's______ strategy is the best strategy for that player, taking as given the other player's ______strategy.

In an entry game, managers to look into the ______and work _______ .

-Refer to the payoff matrix above. Which of the following is true for Happy Campers?

Happy Feet wants to prevent Best Nails from entering the nail salon market. The above game tree illustrates the different stra and corresponding payoffs for the two firms. Both Happy Feet and Best Nails have the same strategies of advertising (Ad) or advertising (No Ad). The payoffs represent net profit in millions. -If Happy Feet chooses to No Ad, Best Nails should _ and earn million in net profit.

Camp with Us and Happy Campers compete in the market for campers. Each firm must decide each season if they are going to offer special financing or not. The above payoff matrix shows each firm's net economic profit at each pair of strategies. -Refer to the payoff matrix above. If Camp with Us is known for consistently offering special financing and this is the focal point, what is the equilibrium of the game using the focal point criterion?

If Best Paints and Paint with Us are competing in a duopoly and it is always best for Best Paints to charge a price of $20 per gallon of paint regardless of the price Paint with Us charges, then charging $20 is ________for Best Paints.

Managers of firms in a finitely repeated pricing game who want to engage in tacit collusion should consider methods to create a chance that the game will continue beyond the final period.

Every dominant strategy equilibrium is a Nash equilibrium, but not every Nash equilibrium is a dominant strategy equilibrium.

Camp with Us and Happy Campers compete in the market for campers. Each firm must decide each season if they are going to offer special financing or not. The above payoff matrix shows each firm's net economic profit at each pair of strategies. -Refer to the payoff matrix above. If each cell has a probability of occurrence of 0.25, what are Camp with Us' expected profits?

Jet Cruises wants to prevent Easy Sail from entering the sailboat market. The above game tree illustrates the different strategi corresponding payoffs for the two firms. Both Jet Cruises and Easy Sail have the same strategies of advertising (Ad) or not ad (No Ad). The payoffs represent net profit in millions. -If Jet Cruises chooses to No Ad and Easy Sail then chooses to Ad, Jet Cruises earns million in net profit and Easy Sail earns million.

Frozen Paws wants to prevent Happy Paws from entering the pet frozen treat market. If Frozen Paws expands its capacity, the expansion can lead to all of the following except which one?

It is optimal for a manager to make unpredictable decisions when a rival firm can benefit at the expense of the manager's decisions.

The manager of a large luxury hotel chain is currently negotiating a four year contract with a linens supplier. The linens company will supply fresh laundered bedding and towels to the hotel over a four year period; however, the hotel chain can ends its contract with the linens company at the end of the first, second, or third years if the linens company does not supply quality linens. What can the manager of the hotel chain do to avoid the end- game problem?