Managerial Economics: Final Example
1. Game Theory
A. Question #9-6 (basketball players…)
Barbara:
a. Both Compete = 12 points (individually) ? 24 points (together)
b. Monopolize = 18 points (individually) ? 20 points (together)
c. Cooperates = 2 points (individually) ? 20 points (together)
d. Monopolize = 8 points (dual) ? 16 points
Juanita:
e. Both Compete = 12 points (individually) ? 24 points (together)
f. Monopolize = 18 points (individually) ? 20 points (together)
g. Cooperates = 2 points (individually) ? 20 points (together)
h. Monopolize = 8 points (dual) ? 16 points
Matrix:
1-A Question 1:
If the players play only once, what strategy do you expect the players to adopt?
Answer 1:
An assumption is made that it is an implicit understanding that each player wants to play hard and score as many points as possible in a given basketball game. If the players play together only once against another opponent the best strategy for each of them to take is monopolistic. The reasoning behind this assertion is that, first, each player does not have the explicit knowledge that the other player will cooperate with them during the game and vice-versa. Thus it is in each of their interests to try and own the game singly. Second, if one player were to allow the other player to monopolize the game a non-equilibrium outcome would be seen. Third, there is significant disutility if one player allows the other player to steal all the glory, by allowing the other player to singly monopolize the game. Thus, if each player concentrates on owning the game a dominant strategy is uncovered.
1-A Question 2:
If the players expect to play in many games together, what strategy do you expect the players to adopt?
Answer 2:
An assumption is made that there is an implicit understanding that the two players are members of a team that is trying to win a specific title, e.g. Fordham’s goal of winning the 2007 Atlantic 10 conference women’s basketball championship. In this case, Barbara
A. Question #9-6 (basketball players…)
Barbara:
a. Both Compete = 12 points (individually) ? 24 points (together)
b. Monopolize = 18 points (individually) ? 20 points (together)
c. Cooperates = 2 points (individually) ? 20 points (together)
d. Monopolize = 8 points (dual) ? 16 points
Juanita:
e. Both Compete = 12 points (individually) ? 24 points (together)
f. Monopolize = 18 points (individually) ? 20 points (together)
g. Cooperates = 2 points (individually) ? 20 points (together)
h. Monopolize = 8 points (dual) ? 16 points
Matrix:
1-A Question 1:
If the players play only once, what strategy do you expect the players to adopt?
Answer 1:
An assumption is made that it is an implicit understanding that each player wants to play hard and score as many points as possible in a given basketball game. If the players play together only once against another opponent the best strategy for each of them to take is monopolistic. The reasoning behind this assertion is that, first, each player does not have the explicit knowledge that the other player will cooperate with them during the game and vice-versa. Thus it is in each of their interests to try and own the game singly. Second, if one player were to allow the other player to monopolize the game a non-equilibrium outcome would be seen. Third, there is significant disutility if one player allows the other player to steal all the glory, by allowing the other player to singly monopolize the game. Thus, if each player concentrates on owning the game a dominant strategy is uncovered.
1-A Question 2:
If the players expect to play in many games together, what strategy do you expect the players to adopt?
Answer 2:
An assumption is made that there is an implicit understanding that the two players are members of a team that is trying to win a specific title, e.g. Fordham’s goal of winning the 2007 Atlantic 10 conference women’s basketball championship. In this case, Barbara