Exam 13: Game Theory

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.Now the payoff of the firm who produces a basic computer falls to 10 if the other firm chooses to produce an advanced computer.Then

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,and the government imposes a $20 per firm tax on firms that service this route,which of the following maximizes the firms' joint profits?

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,what will happen if the government offers a $30 subsidy to airlines that serve this route?

Suppose market demand is p = 10 - Q.Firms have a fixed cost of five and no marginal cost.If firm A is the incumbent,can it deter the entry of its rival,firm B?

With regard to preventing entry,if identical firms act simultaneously,

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.The potential entrant cannot earn a profit if the incumbent

Consider the following sequential move game: A)If z=0,find any subgame perfect NE. B)For what values of z will M occur in the subgame perfect equilibrium?

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.Now the payoff of the firm who produces a basic computer falls to 10 if the other firm chooses to produce an advanced computer.Then the joint profits

Two identical firms are considering entering a new market that currently has no suppliers.The demand is large enough for both firms to make a positive profit.There are no fixed costs to enter.Explain how a simultaneous decision to enter on the part of the two firms will lead to a different outcome than a sequential entry decision.

Explain why it is unwise to bid more than your valuation of the good in a sealed bid second-price auction.

Consider two agents simultaneously deciding whether to contribute to a public good - the good is said to be public because,if it is made available,an agent who free-rides by paying nothing gets just as much pleasure from its enjoyment as an agent who paid for it.If at least one agent contributes to the construction of the public good,both agents will enjoy a payoff of four from the public good.To ensure the public good is constructed,player one must pay c₁ or player two must pay c₂.Assume that c₁ < 4 and c₂ < 4.If neither contributes,the good is not constructed and neither player gets enjoyment from the project.If one or both players contribute,then the good is constructed and each player enjoys a payoff of four minus the contribution cost if that player has contributed.The grid below shows this: Assume that the costs are common knowledge to both players. a.Find any pure-strategy Nash Equilibrium(s)to the game. b.Find the Mixed Strategy Nash Equilibrium - the probabilities you find will be functions of the cost parameters. c.If c₁ = c₂ = 1,write out the mixed strategy NE and find the probability that the public good is provided? d.If c₁ = c₂ = 3,write out the mixed strategy NE and find the probability that the public good is provided?

If neither firm has a dominant strategy,a Nash equilibrium cannot exist.

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,what happens if the government imposes a $20 per firm tax on firms that service this route?

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,what will happen if the government offers a $30 subsidy to airlines that serve this route?

Game theory shows that

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,which one of the following statements is true?

-The above figure shows the payoff matrix for two firms,A and B,selecting an advertising budget.The firms must choose between a high advertising budget and a low advertising budget.A Nash equilibrium is that

The Internet auction site eBay is an example of a(n)

-The above figure shows the payoff matrix facing an incumbent firm.Assuming a fixed cost of entry,will the incumbent deter entry? Why?

For the following, please answer "True" or "False" and explain why. -If a player has a dominant strategy in a simultaneous-move game,then she is sure to get her best outcome.