Players 1 and 2 work together to produce an output with value X X= 12e1 +9e2 where e; is the effort exerted by player i The utility gathered by players 1 and 2 are given by ₁ = $X - (01)² and 1₂ = (1-s) X-(₂)² respectively. where 0 < s <1 is the share of the value created going to player 1. The value for 8 that maximizes total surplus TS=U₁+U₂ is given by 064% 56% None of the other answers 82% 75%
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- CENGAGE MINDTAP News Analysis: Go for the Video Bonus While spending the weekend in New York City, Andrew, Beth, and their son, Darnell, are lucky enough to hail the Cash Cab for their taxi ride. During their ride, they win $100 for correct answers and receive only one strike for a wrong answer, so at the end of the ride they are eligible for the video bonus question. Their vacation budget before entering the cab was $400, and based on their understanding of the type of bonus question they'll be asked, they believe they have a 70% chance of getting the question right. As explained in the article, if they answer the video bonus question correctly, they will double their winnings, but if they miss the video bonus question, they will lose all of what they had previously won. Alternatively, they can choose not to play for the bonus and walk away with their winnings from the cab ride. The following graph shows the cab riders' utility as a function of their total vacation budget. For…A football coach says that given two players, he always prefers the one who is bigger and faster. Is his preference relation transitive? Is it complete? Prove it. The second coach says that she always prefers the one who is bigger or faster. Is her preference relation transitive? Is it complete? Prove it.Sean is arguing with his girlfriend, Yvette. They have been going out for a little more than two years. YVETTE: I'm leaving you, Sean. Get over it. SEAN: Are you saying that being single will make you happier than you've been with me? Speaking personally, I think the utility we've had in this relationship was much more than you could have had if you'd been single this whole time! YVETTE: I had taken an economics class and the word "utility" rings a bell. It's not that at all. We've had a fine time. It's that the utility I would get by continuing our relationship isn't worth it anymore. SEAN: I've never been dumped by someone citing the law of before. You're a piece of work, you know that? Yvette doesn't hear. She has already walked off, leaving Sean feeling like something of a sunk cost.
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- Consider an agent who has to choose how many donuts to eat. He exhibits the choices C({1, 2}) = {1, 2} and C({1, 2, 3}) = {2, 3}. Can these choices be explained by : (i) maximization of a complete and transitive preference? (ii) satisficing? (iii) regret aversion? %3DSuppose that you are the owner of a bakery. The customers who buy the cakes you bake have different tastes x for the chocolate content, with x ranging from 0 to 1. The total number of customers is N = 100 are equally distributed along the [0,1] line. If x is the customer’s most preferred chocolate content (location of the customer), and the cakes have chocolate content z, then customer x bears a unit utility cost of $1. Suppose that all customers' reservation price for a slice of a cake is $3. The marginal cost of producing one slice of a cake of any chocolate content is equal to $1. Suppose that you would always like to serve all the customers. What is the "marginal cost of each unit is (c)" ? What is the "set up cost of each store is F" ? What is the number of the retail shop (n)? What is the transportation cost ( t ) ? What is the reservation price (V) ?You have been assigned to create a new TV game show, and you have an interesting idea that you call, “I WANT TO BE A MILLIONAIRE.” The basics are: 1) two contestants; 2) the show begins with each contestant being given $1 million (!); and then 3) they begin playing a game that can increase or decrease that $1 million. You worry that the initial outlay of $2 million will stun your producers, so you decide to prepare them with a simpler version of your game that you call: “I WANT $3.” There are four steps in this simpler game: There are two contestants/opponents (who do not know each other and cannot communicate with each other during the game). Each player is given $3 at the start of the game. Independently and simultaneously, each player must choose whether they want to add $0, $1, $2 or $3 to their initial stake of $3. Doing so reduces their opponent’s award by $0, $2, $4, or $6, respectively. Each player knows that their payoff at the end of the game is based on their initial $3,…