I need some help with answering this problem:
Strategy Advertise Don't Advertise
Firm A Advertise $4,$4 $20, $1
Don't Advertise $1, 20 $10, $10
A. Does anyone have a dominant strategy?
B. What is the Nash Equilibrium?
C. What is the socially optimal solution (at what point is total profit maximized)?
D. How would a negotiated solution lead to this socially optimal solution?
E. If you had to call in a mediator to negotiate this socially optimal solution, how much would they charge and why?
This is a somewhat classic Game Theory problem:
A. Firstly, the concept of dominant strategies has been raised. A weakly dominant strategy is at least as good in most contingencies, and better in one contingency. A strictly dominant strategy is better in all contingencies. Lets look at the payoffs:
Firm A appears to have a dominant strategy (advertise). Consider where Firm B decides to ...
Nash equilibrium and dominant strategies are examined.
Strategy types are assessed.
Identify the dominant strategy and Nash equilibrium
Scenario A Consider the following game: Payoffs are in millions of dollars.
Put Poison Pill
In Turbo Tech Dump Cash Assets
of Zamboni Tech
ABC Corporation Buy Turbo Tech -$100, -$1 $2, -$0.5
Buy Zamboni Tech 1, -$1 -$0.5, -$0.5
.In the game in Scenario A, what is the Nash equilibrium?
(Points : 3)
The strategy pair associated with -$100, -$1.
The strategy pair associated with $2, -$.5.
The strategy pair associated with $1, -$1.
The strategy pair associated with -$.5, -$.5.
There is no Nash equilibrium in pure strategies.
6. Scenario CC Consider the following game:
It costs each firm Brokely $3,000 per period to use filters that avoid polluting the lake. However, each firm must use the lake's water in production, so it is also costly to have a polluted lake. The cost to each firm of dealing with water from a polluted lake is $2000 times the number of polluting firms.
Pollute Donâ??t Pollute
Burgess, Inc. Pollute -$4,000, -$4,000 -$2,000, -$5,000
Donâ??t Pollute -$5,000, -$2,000 -$3,000, -$3,000
What is true about dominant strategies in the game in Scenario CC?
"Pollute" is a dominant strategy for both firms.
"Pollute" is a dominant strategy for Burgess only.
"Don't Pollute" is a dominant strategy for both firms.
"Don't Pollute" is a dominant strategy for Burgess only.
There are no dominant strategies.View Full Posting Details