1) Complete a game tree to represent this game. 2) Based on your solution in part (a), determine the subgame perfect Nash Equilibrium solution.
Q: Both firms in a Cournot duopoly would enjoy higher profits if: each firm simultaneously…
A: Cournot duopoly refers to the market structure where only two firms are competing with each other to…
Q: Suppose that BMW and Audi are introducing new cars to the market at the same trade show. If both…
A: We are going to represent the mentioned game in the extensive form and solve for subgame perfect…
Q: You and a classmate are assigned a project on which you will receive one combined grade. (You each…
A: Note: Since, you've posted question with multiple sub-parts, we will solve the first the first three…
Q: Table A shows the pricing options for two drone operators, Andrew and Jasmine, as an oligopoly in a…
A: In the above oligopoly game , tit for tat strategy would be the one in which each of the players…
Q: Suppose Ishmael and Santiago are the only two fishermen who fish in Lake Hardin. Each must choose…
A:
Q: Table B Pricing Matrix shows the pricing options for two mechanics, Angela and Tom, operating in an…
A: A pricing strategy methodology is a model or technique used to layout the best price for an item or…
Q: Two fishermen (Andy and Bob) are fishing in the same lake. Each can either fish for 5 or 6 hours.…
A: Nash equilibrium is a decision making concept in game theory. It conceptualize the behaviour and…
Q: Consider a game with two players A and B and two strategies X and Z. If both players play strategy…
A: In Game theory a dominant strategy is one in which a player gets the better payoff regardless of the…
Q: Consider the following sequential-move game. There are two players: player 1 and player 2. First,…
A: We have two player game where player 1 is moving first and player 2 is moving second.
Q: Consider two students, Hana and Avan at AUIS. Both students are taking their final exam in their…
A: Given the payoffs, the following would be the payoff matrix. Hannah Conceal reveal…
Q: Consider the following three player game, recaling that a strategy profile (A, B, B), for example,…
A: The ideal conclusion of a game is where there is no incentive to depart from the beginning strategy,…
Q: For example, the lower-left cell shows that if Movietonia prices low and Videotech prices high,…
A: Game theory is all about choosing an optimal strategy by an oligopoly firm in conflict situations.…
Q: Suppose Telkomsel and Indosat are the only two firms in the internet market. They face the following…
A: Dominant strategy: it is a strategy for a player that gives maximum to him, irrespective of what…
Q: Suppose that U.S.-based Qualcomm and European-based T-Mobile are contemplating infrastructure…
A: The Nash equilibrium is the combinations of the strategies that lead to mutual maximization of the…
Q: Suppose Andrew and Beth are playing a game in which both must simultaneously choose the action Left…
A: Game theory is the study of how interacting choices of economic agents produce outcomes with respect…
Q: irms A and B under duopoly (oligopoly) are competing in an engine production market. Firm A’s…
A: Firm's A MC = $14 Firm's B MC= $15
Q: In a two-player, one-shot simultaneous-move game each player can choose strategy A or strategy B. If…
A: Nash Equilibrium In economics, Nash Equilibrium is a notion for finding a solution to a game.…
Q: Consider a two-player, sequential-move game where each player can choose to play right or left.…
A: Nash Equilibrium:- The Nash equilibrium can be explained as a game theory decision-making hypothesis…
Q: We consider the following three-player strategic form game, where Alice's strategies are U, C, and…
A: Nash Equilibrium is defined as a concept of game theory where a player cannot deviate from his…
Q: What are the distinguishing features of oligopoly?
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: How does the number of firms in an oligopoly affect the outcome in the market. What is the prisoners…
A: Oligopoly refers to a market structure in which few firms are selling similar or identical products…
Q: what are oligopoly firms? can you identify the main characteristics of firms in an oligopoly market?…
A: Oligopoly Market: The market structure where the number of firms is much smaller than the perfectly…
Q: Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly…
A: This is the case of duopolies which is an extension of monopoly where both the firms dominate the…
Q: Production possibilities for two producers and merchants, Eric and Stan, are shown in the table…
A: Comparative cost advantage: - it is a principle of international trade given by David Ricardo which…
Q: Dairy King Advertise Doesn't Advertise Advertise 8, 8 15, 2 Creamland Doesn't Advertise 2, 15 11, 11
A: Solution: 1) If Creamland decides to advertise, it will earn a profit of $8 million if Dairy…
Q: In a world comprising two economies, each has to choose whether to use renewable energy in its…
A: Given, 2 Players : Developed Economy and Emeerging EconomyBoth Players have two strategies :…
Q: Consider a firm in an oligopoly in which a few sellers offer differentiated brands of widgets.…
A: P = 12 - 0.5Q (P>10) P = 14 - Q (P<10)
Q: In the game shown below, Player 1 can move Up or Down, and Player 2 can move Left or Right. The…
A: Given date , In the game shown below ,Player 1 can move up or down, and player 2 can move left or…
Q: Farmer Jones and Farmer Smith graze their cattle on the same field. If there are 20 cows grazing in…
A: Nash equilibrium is a concept in game theory when the player maintains their original idea despite…
Q: Untied and Air ’R’ Us are the only two airlines operating flights between Collegeville and Bigtown.…
A: Part A) If Air R charges low price, it's better for Untied to charge lower cost as its profit is…
Q: Suppose that U.S.-based Qualcomm and European-based T-Mobile are contemplating infrastructure…
A: Nash equilibrium refers to the situation where there is no incentive for both the player deviates…
Q: Suppose Toyota and Honda must decide whether to make a new breed of side-impact airbags standard…
A: In the study of game theory, extensive form games is defined as the way of describing any game with…
Q: In the Tech industry, Tesla and Toyota are two famous brands and compete. Recently, both firms are…
A: To find the Nash equilibria, we examine each action profile in turn. Neither player can increase her…
Q: Suppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff…
A: The payoffs are written in this format – (Expresso, Beantown). We see Expresso’s payoff row-wise and…
Q: Lets again consider the same two firms from the previous question. In this game, both firms have…
A: Given information Two firms are in the Market Firm 1 and Firm 2 Total customer are 10 million in the…
Q: Which of the following statements about the classic Cournot duopoly model is incorrect? 1)The…
A: Oligopoly market structure is the market structure in which there are few large firms in the market…
Q: The payoff matrix of economic profits, below, displays the possible outcomes for Coles (C) and…
A: In a specific game, the dominant strategy of the players refers to their preferred decision that…
Q: Suppose there are only two firms that sell smartphones, Flashfone and Pictech. The payoff matrix…
A: Given; 1) If Flashfone prices high, Pictech will make more profit if it chooses a low price.…
Q: Problem 5 Two countries are currently facing the COVID threat when trading with each other. Such…
A: The simultaneous game means that two players make a decision and at the same time their decisions…
Q: Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly…
A: Firm A: If firm A cheats and firm B colludes than firm A will get maximum payoff. But if firm B also…
Q: On a duopolistic market, two tobacco firms are considering separately whether or not to engage in a…
A: [a] A dominant strategy is a strategy that a player will always follow irrespective of the game…
Q: In the Cournot oliogopoly model, firms compete by setting quantities. In class we noted that as the…
A: Cournot oligopoly model :- Under this model firms produce identical goods and they compete each…
Q: Homework (Ch 17) Enter your search term Attempts Keep the Highest /6 5. To advertise or not to…
A: If Expresso decides to advertise (top row) it will earn a profit of : A) 8mn, if Beantown does…
Q: Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following…
A:
Q: To advertise or not to advertise Suppose that Creamland and Dairy King are the only two firms…
A: Hi , as you have posted multiple questions , we are only allowed to solve only first 3 subparts at a…
Suppose that BMW and Audi are introducing new cars to the market at the same trade show. If both companies introduce a hybrid car, they will each earn $200 million. If they both introduce an electric car, they will each make $400 million. However, if they introduce different types of cars, the manufacturer that produces the electric car will earn $900 million, while the manufacturer that produces the hybrid car will make $500 million. In addition, BMW has committed to introducing their car first at the tradeshow by agreeing to pay Audi a guaranteed $200 million.
1) Complete a game tree to represent this game.
2) Based on your solution in part (a), determine the subgame perfect Nash Equilibrium solution.
The game tree will depict the different combination of strategies and the payoff associated with them. Here, company-B is the first-mover and company-A is the second mover. Company-A will have a guaranteed income of $200 million.
Step by step
Solved in 2 steps with 1 images
- Suppose Ishmael and Santiago are the only two fishermen who fish in Lake Hardin. Each must choose between fishing for 20 hours per week or for 40 hours per week. If both choose to fish for 20 hours per week, then each can earn a profit of $3,000 per week. If both choose to fish for 40 hours per week, then each can earn a profit of $2,000 per week. If Santiago fishes for 40 hours per week, and Ishmael fishes for 20 hours per week, then Santiago can earn a profit of $4,000 per week, and Ishmael can earn a profit of $1,000 per week. If Ishmael fishes for 40 hours per week, and Santiago fishes for 20 hours per week, then Ishmael can earn a profit of $4,000 per week, and Santiago can earn a profit of $1,000 per week. a. Construct the weekly payoff matrix for this situation. Ishmael 20 Hours 40 Hours Santiago 20 Hours $ for Santiago$ for Ishmael $ for Santiago$ for Ishmael 40 Hours $ for Santiago$ for Ishmael $ for Santiago$ for Ishmael b. What is the equilibrium outcome…Airbus and Boeing are the two largest producers of commercial aircraft in the world. They are each trying to determine whether or not they should build an ultra-large passenger plane. They have both decided that building such a plane would be profitable, but only if one of them produces it. The market is simply not large enough for them to both make profits selling this new plane. Consequently, if they both produce the plane, each will lose $10 billion. If only one of them produces, that firm will make $50 billion. Regardless of what the other does, if they choose not to produce the plane, they neither make nor lose money. a. Construct the normal or strategic form of this game and find the pure strategy NE. b. Airbus is a corporation in the European Community while Boeing is an American corporation. The EC has a long history of subsidizing Airbus as well as other man- ufacturers it deems important. Let us remodel this game assuming that the EC tells Airbus that if Airbus produces the…Suppose Telkomsel and Indosat are the only two firms in the internet market. They face the following payoff when the want to invest in the research budget: When both companies invest in small budget, Telkomsel will gain Rp 40 billion and Indosat will gain Rp 50 billion. When both of them invest in large budget, Telkomsel will gain Rp 20 billion and Indosat will gain Rp 30 billion. When Telkomsel invest in large budget and Indosat in small budget, Telkomsel will gain Rp 30 billion and Indosat will gain zero. When Telkomsel invest in small budget and Indosat in large budget, Telkomsel will gain zero and Indosat will gain Rp 70 billion. a). Draw the payoff matrix b). Is there a Nash Equilibrium for that case? Explain.
- Suppose that Jason and Chad each are thinking of opening up a diet coke stand on the fourth floor of this building. Suppose that potential customers are evenly spaced on a distance that is normalized to 1. Customers will buy a diet coke from whichever stand requires the least walking. If they are the same distance the customer will flip a coin. This is depicted below. 1/4 1/2 3/4 Suppose that Jason and Chad are simultaneously choosing the location of their stands, what is the Nash Equilibrium location? a. One of them puts a stand at 3/4 and the other puts a stand at 1/4 b. Chad and Jason put their stands right next to each other at 1/2 c. One of them puts a stand at 0 and the other puts a stand at 1 d. There is no Nash Equilibriumtwo timber companies, Alpha and Beta, have to decide whether to harvest timber from the North Hill or the South Hill and then sell the timbers in the same market. If both harvest from North Hill, each company can harvest 100 tons of timber. If both companies harvest from South Hill, each company can harvest 150 tons of timber. If one company harvests from North Hill and the other harvests from South Hill, the company at North Hill can harvest 150 tons of timber while the company at South Hill can harvest 250 tons of timber. The price of timber is dependent on the total supply of timber in the market. The price will be $180 per ton if the total supply is 200 tons, $150 per ton if the total supply is 300 tons and $100 per ton if the total supply is 400 tons. To both companies, the cost of harvesting in North Hill is $5,000 and the cost of harvesting in South Hill is $10,000. (a) If Alpha and Beta were to make a decision simultaneously, construct the payoff matrix in terms of profit for…Exercise 7: The facility location game. Our example is a game in which two firms compete through their choice of locations. Suppose that two firms A and B are each planning to open a store in one of six towns located along six consecutive exits on a highway. We can represent the arrangement of these towns using a six-node graph as in Figure 1 Now, based on leasing agreements, Firm 1 has the option of opening its store in any of towns 1, 3, or 5, while Firm 2 has the option of opening its store in any of towns 2, 4, or 6. These decisions will be executed simultaneously. Once the two stores are opened, customers from the towns will go to the store that is closer to them. So for example, if Firm A open its store in town 3 and Firm B opens its store in town 2, then the store in town 2 will attract customers from 1 and 2, while the store in town 3 will attract customers from 3, 4, 5, and 6. If we assume that the towns contain an equal number of customers, and that payoffs are directly…
- 12.3 Armed Conflict: Consider the following strategic situation: Two rival armies plan to seize a disputed territory. Each army's general can choose either to attack (A) or to not attack (N). In addition, each army is either strong (S) or weak (W) with equal probability, and the realizations for each army are independent. Furthermore the type of each army is known only to that army's general. An army can capture the territory if either (i) it attacks and its rival does not or (ii) it and its rival attack, but it is strong and the rival is weak. If both attack and are of equal strength then neither captures the territory. As for payoffs, the territory is worth m if captured and each army has a cost of fighting equal to s if it is strong and w if it is weak, where sSuppose that two companies – AlphaTech and BetaLabs – are competing for market share and must simultaneously decide whether to develop a new product. Both companies are reluctant to make a decision as it is only economical for one company to develop a new product. Each company earns nothing if they decide not to develop a new product. One company can earn $50 million by developing a new product only if their competitor does not. If both companies decide to develop a new product, they each lose $10 million. Complete the payoff matrix to represent this game. Based on your solution in part (a), determine the maximin solution.Suppose Toyota and Honda must decide whether to make a new breed of side-impact airbags standard equipment on all models. Side-impact airbags raise the price of each automobile by $1,000. If both firms make side-impact airbags standard equipment, each company will earn profits of $2.5 billion. If neither company adopts the side-impact airbag technology, each company will earn $1 billion (due to lost sales to other automakers). If one company adopts the technology as standard equipment and the other does not, the adopting company will earn a profit of $3 billion and the other company will lose $1.5 billion. If you were a decision maker at Honda, would you make side-impact airbags standard equipment? Explain.You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: splishy splashers, raskels, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashers decreases by 8%, the quantity of raskels sold increases by 6% and the quantity of kipples sold decreases by 8%. Your job is to use the cross-price elasticity between splishy splashers and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price…Suppose Toyota and Honda must decide whether to make a new kind of side-impact airbags standard equipment on all models. Side impact-airbags raise the price of each automobile by $1000. If both firms make side-impact airbags standard equipment, each company will earn profits of $2.5 billion. If neither company adopts the side-impact airbag technology, each company will earn $1 billion (due to lost sales to other automakers). If one company adopts the technology as standard equipment and the other does not, the adopting company will earn a profit of $3 billion and the other company will lose $1.5 billion. If you were a decision maker at Honda, would you make side-impact airbags standard equipment?q19 If you advertise and your rival advertises, you each will earn $4 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $1 million and the non-advertising firm will earn $5 million. If you and your rival plan to be in business for 10 years, then the Nash equilibrium is a. for each firm to not advertise in any year. b. for neither firm to advertise in early years but to advertise in later years. c. for each firm to advertise every year. d. for each firm to advertise in early years but not advertise in later years.SEE MORE QUESTIONS