Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 17.2, Problem 2QQ
To determine
Story of Prisoner’s dilemma.
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5. To advertise or not to advertise
Suppose that Fizzo and Pop Hop are the only two firms that sell orange soda. The following payoff matrix shows the profit (in millions of dollars) each
company will earn depending on whether or not it advertises:
Рop Hop
Advertise Doesn't Advertise
Advertise
10, 10
18, 2
Fizzo
Doesn't Advertise
2, 18
11, 11
For example, the upper right cell shows that if Fizzo advertises and Pop Hop doesn't advertise, Fizzo will make a profit of $18 million, and Pop Hop will
make a profit of $2 million. Assume this is a simultaneous game and that Fizzo and Pop Hop are both profit-maximizing firms.
If Fizzo decides to advertise, it will earn a profit of $
million if Pop Hop advertises and a profit of $
million if Pop Hop does not
advertise.
If Fizzo decides not to advertise, it will earn a profit of S
million if Pop Hop advertises and a profit of $
million if Pop Hop does not
advertise.
If Pop Hop advertises, Fizzo makes a higher profit if it chooses
If Pop Hop…
12. Consider a game where each player picks a number from 0 to 60. The guess that is closest to half ofthe average of the chosen numbers wins a prize. If several peopleare equally close, then they share theprize. The game theory implies that
(A) all players have dominant strategies to choose 0
(B) all players have dominant strategies to choose 30
(C) there is a Nash equilibrium where all players pick 0
(D) there is a Nash equilibrium where all players pick positive numbers
13. Behavioral data in such games suggests that
(A) most subjects choose 0;
(B) most subjects choose 30;
(C) common answers include 30, 15, 7.5, and 0;
(D) most subjects use randomization.
Can you help me answer number 13 please?
6. Consider the following two-player game:
2
L M
U 3,3 2,3
1 M 2,1 3,1
D
R
0,2
3,3
0,3 3,0-5, -5
a. Find all pure NE.
b. Find a (non-pure) MNE in which player 1 (the row player) plays a pure
strategy.
c. (Harder Question) Show that there cannot be a CE prescribing that strat-
egy D of player 1 (the column player) is played with positive probability.
Chapter 17 Solutions
Principles of Microeconomics (MindTap Course List)
Ch. 17.1 - Prob. 1QQCh. 17.2 - Prob. 2QQCh. 17.3 - Prob. 3QQCh. 17 - Prob. 1CQQCh. 17 - Prob. 2CQQCh. 17 - Prob. 3CQQCh. 17 - Prob. 4CQQCh. 17 - Prob. 5CQQCh. 17 - Prob. 6CQQCh. 17 - Prob. 1QR
Ch. 17 - Prob. 2QRCh. 17 - Prob. 3QRCh. 17 - Prob. 4QRCh. 17 - Prob. 5QRCh. 17 - Prob. 6QRCh. 17 - Prob. 7QRCh. 17 - Prob. 1PACh. 17 - Prob. 2PACh. 17 - Prob. 3PACh. 17 - Prob. 4PACh. 17 - Prob. 5PACh. 17 - Prob. 6PACh. 17 - A case study in the chapter describes a phone...Ch. 17 - Prob. 8PACh. 17 - Prob. 9PA
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- 1. For the following game Player B Player A Left 7,17 10,5 4,4 Middle Right 14,11 4,3 10,25 21,21 Тop Middle 14,4 Bottom 7,3 a) Determine the Nash equilibrium is any? b) Represent the game sequentially starting with player 1 and determine the sub-game perfect equilibrium c) Represent the game sequentially starting with player 2 and determine the sub-game perfect equilibrium d) Find the mixed strategy Nash equilibrium of the following game e) Firm 1 Firm 2 High price Low price High price 4,3 2,4 Low price 2,4 3,3arrow_forwardPLEASE ANSWER ASAP How do you differentiate Oligopoly from a Monopoly? And how can an oligopoly market earns its profit?arrow_forward13. Which of the following is not true about the Prisoner's dilemma game? A. there is a unique Nash equilibrium. B. there is a dominant strategy for each player. C. The equilibrium outcome maximizes the joint payoffs of the two players. D. the game is being played only once Solve with details explanation and no plagiarism otherwise I will give you downvotearrow_forward
- #4. If network externalities exist in an industry, the ________ firm to enter the market is often the one that succeeds in dominating the industry. a. first b. second c. third d. fourth e. fiftharrow_forward4. This problem is based on after chapter question 11. If you are not familiar with the rule of baseball game, just use the figure below. a. Find the subgame perfect Nash equilibrium. Note: like many sports games we discussed, the equilibrium is often about mixed-strategies. b. What are the equilibrium payoffs of two players? FIGURE PR9.11 The Suicide Squeeze Game Torre Suicide squeeze Torre 10 LaRussa 0 Pitchout No suicide squeeze 2 ∞0 N LaRussa 8 Suicide squeeze No pitchout Suicide squeeze 9 Pitchout No suicide squeeze 4 6 No suicide squeeze Torre LaRussa No pitchout Suicide squeeze 37 No suicide squeeze 5 55 5arrow_forwardExercise A.1 . Compare the quantity and price of an oligopoly with those of a monopoly and those of a competitive market.arrow_forward
- age Which of the following statements is the best description of a Nash equilibrium? Select one: O a. An equilibrium outcome achieved by cooperation between players in the game b. An outcome that is achieved when players in the game have jointly maximized profits and divided those profits according to market share of each player O c. An outcome where each player's strategy depends on the behaviour of its opponents d. An outcome where each player's best strategy is to maintain its present behaviour given the present behaviour of the other players Next pagearrow_forward4. Consider the following static zero sum game G. Colin D E A-4 1 3 1 4 1 -1 -1 D 3 -1 (a) Draw the movement diagram for the game. (b) Explain why you would expect Colin's optimal strategy for G to involve at most four of his available pure strategies. 143 5 4223arrow_forward12. What is the subgame-perfect outcome from a finitely repeated game? a. Iterated Elimination Outcome played in each stage b. Backwards Induction Outcome played in each stage Nash Equilibrium played in each stage d. Nash Equilibrium in stage 1 onlyarrow_forward
- 4. Consider a two player game with Fred and Barney, who tal turns removing matchsticks from a pile. They start with 33 matchsticks, and Fred goes first. On each turn, ecach player may remove either one, two, three, four, or five matchsticks. The player to remove the last matchstick wins the game. What are the optimal strategies for each player? Who will win? b. Suppose now that they can remove up to six matchsticks, how will the optimal strategies change for- each player? a.arrow_forward6.Define oligopoly in your own words and elaborate on the characteristics of oligopoly?arrow_forward2. Which is a better market structure, Monopoly or Oligopoly? Why?arrow_forward
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