Dominant Strategies. Suppose two competitors each face important strategic decisions where the payoff to each decision depends upon the reactions of the competitor. Firm A can choose either row in the payoff matrix defined below, whereas firm B can choose either column. For firm A the choice is either "up" or "down;" for fir
Recognize each of the following statements as being true or false and explain why A. A set of strategies constitutes a Nash equilibrium if no player can improve their position given the strategies chosen by other players. B. A secure strategy is very conservative and should only be considered if the rival's optimal strateg
Suppose that JVC is trying to decide how to price a new stereo system composed of a receiver, CD player, and speakers. The company's economists have estimated that two different groups will purchase these products: students and club owners. The economists' analysis suggests that the total market for its brand of stereos consi
Game Theory - Strategy. See attached file for full problem description. Two major networks ABC and NBC are competing for viewer ratings in the 8-9 p.m. and 9-10 p.m. slots on a particular weeknight. Each has two shows to fill this time period and is juggling its lineup. Each can choose to put is "bigger" show first (8-9 p.
Envison a pricing problem between MOnsanto and Holand Sweetner in 1992 that led to the Monsanto contract. Assume: 1) Cost to Holland Sweetner of entering US market is $25 million 2) Monsanto & Holland Sweetner simultaneously choose to quote either a high or low price to Pepsi and Coke for aspartame 3) If both Monsanto
A husband and wife live together in a beautiful little house. Both enjoy having a clean and beautiful house, which is the result of both of their cleaning efforts, but both the husband and the wife dislike putting any actually effort into cleaning. Also, they both value the cleanliness of the house differently. They each
H T H -1,1 1,-1 T 1,-1 -1,1 1. What is the MSNE of the matching pennies game above? 2. Make a graph of the best-responses. 3. Suppose this game were repeated 15 times. What would be the SPNE of the repeated game? Suppose that someone decided to hold the World Series of Matching Pennies in Las Vegas, Nevada. The contes
As part of a fractious breakup, Dana and Blair have recently sold their joint possession, an electric keyboard, for $200. They now are arguing about how to split the proceeds of the sale. In order to reach a conclusion, they have enlisted the services of Mordecai the Mediator. Mordecai proposed the following solution: "I want ea
Note: Please I need a thorough explanation. 1. Explain the meaning of a Nash Equilibrium when firms are competing with respect to price. Why is the equilibrium stable? Why don't the firms raise prices to the level that maximizes joint profits? Also discuss and critique what strategies firms could use to attempt to maximize
In a one-shot game, if you advertise and your rival advertises, you will earn $7 million and your rival will earn $2 million in profits. If neither of you advertise, your rival will make $4 million and you will make $2 million. If you advertise and your rival does not, you will make $8 million and your rival will make $3 million
4) Mitchell Electronics produces a home video game that has become very popular with children. Mitchell's managers have reason to believe that Wright Televideo Company is considering entering the market with a competing product. Mitchell must decide whether to set a high price to accommodate entry or a low price to deter entry
Two basketball players, Barbara and Juanita, are the best offensive players on the school's team. They know if they "cooperate" and work together offensively-feeding the ball to each other, providing screens for the other player, and the like- they can each score 12 points. If one player "monopolizes" the offensive game, whil
Using the example of coordination problems in the market for HDTV, show the game in strategic form using hypothetical payoffs of your choice. Use the arrow technique to identify the equilibria. See the attached file for full problem description
See the attachment. Three airlines (A, B and C) are competing for passengers on a lucrative long-haul air route. At present, the carriers are charging identical fares ($225 for a one-way ticket), the result of a truce in recent price wars. The airlines currently compete for market share via the number of scheduled daily departu
You operate in a duopoly in which you and a rival must simultaneously decide what price to advertise in the weekly newspaper. If you each charge a low price, you each earn zero profits. If you each charge a high price, you each earn profits of $3. If you charge different prices, the one charging the higher price loses $5 and
Solve and explain You are considering entering a market serviced by a monopolist. You currently earn $0 economic profits, while the monopolist earns $5. If you enter the market and the monopolist engages in a price war, you will lose $5 and the monopolist will earn $1. If the monopolist doesn't engage in a price war, you
Solve and explain 3. You are a potential entrant into a market that previously has had entry blocked by the government. Your market research has estimated that the market demand curve for this industry is P = 22,500 - 75Q, where You estimate that if you enter the market, your own cost function will be Cy(Qy)
1. (a) A monopolist uses price discrimination to increase their profits. Where does this profit come from? Use a graph to explain your answer. (b) How is monopolistically competitive firm different from a perfectly competitive firm in the long-run? Graph this. (c) What characteristic of monopolistic com
Kodak & Fuji produce photographic film. Suppose that there are no other significant producers, so that Kodak and Fuji constitute a duopoly (oligopoly). Suppose that the firms can produce 500 or 750 rolls of film for a given market in a given quarter. Assume (1) that firms face the same cost structure; (2) that if both produce 50