ECM002 Business Economics Instructions: Please answer four out of the following six following questions: Question 1. Suppose Cola- Sol and Miniranda are the only two companies producing a particular type of cola drink in the soft drink industry. Both companies are considering launching a new drink with a light lemon twist. They can launch their products either at a low price or at a high price. The expected net payoffs are the following: If both companies choose a high price strategy‚ Cola-
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2. http://econweb.umd.edu/~borowitz/dominant_strategy_equilibrium.pdf b. Discuss the concept of Nash equilibrium. 1.http://www.economics.utoronto.ca/osborne/igt/nash.pdf 2. http://www.columbia.edu/~rs328/NashEquilibrium.pdf c. Is every dominant strategy equilibrium a Nash equilibrium? 1. http://economics.fundamentalfinance.com/game-theory/nash-equilibrium.php d. What do you understand by subgame-perfect equilibrium? 1. http://faculty.apec.umn
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b. Is there Nash equilibrium in this game? Explain There are two Nash Equilibrium which are (Left‚ Left) and (Right‚ Right). If driver 1 is going left then driver 2 can choose left and less chances for an accident so to speak. The reverse is true that if driver 1 goes right driver 2 should
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ECON 206 Practice Quiz (chapter 17) ____ 1. In general‚ game theory is the study of a. how people behave in strategic situations. b. how people behave when the possible actions of other people are irrelevant. c. oligopolistic markets. d. all types of markets‚ including competitive markets‚ monopolistic markets‚ and oligopolistic markets. Table 17-2. The table shows the town of Pittsville’s demand schedule for gasoline. For simplicity‚ assume the town’s gasoline seller(s) incur the same
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Introduction to Game Theory Fall 2012 1 / 18 What is game theory? Robert J. Aumann‚ 1985: Brie y put‚ game and economic theory are concerned with the interactive behavior of Homo rationalis | rational man. . . [An] important function of game theory is the classi cation of interactive decision situations. Roger B. Myerson‚ 1991: Game theory can be de ned as the study of mathematical models of con ict and cooperation between intelligent rational decision-makers. Game theory provides
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this product is given by 396 — 4x2‚ construct the overall marginal cost and determine profit maximising output in each plant. Explain the basic tenets of Rawl’s theory of justice. Define ’Nash equilibrium’ and explain with the help of the game ’Prisoner’s Dilemma’. Provide an example of a game with multiple Nash equilibria. MEC-001 1 P.T.O. SECTION - B Attempt any four questions from this section : 5. 4x10=40 With Cobb - Douglas production functions‚ show that : the output elasticity with
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Dilemma‚ Tragedy of the Commons‚ Nash Equilibrium‚ Cows‚ and Climate Change ’" ’The Prisoners ’ Dilemma‚ Tragedy of the Commons‚ Nash Equilibrium‚ Cows‚ and Climate Change ’ N.p.‚ n.d. Web. 16 Oct. 2012. <http://www.cccep.ac.uk/Events/Past/2011/Feb/prisoners-dilemma-climate-change.aspx>. 7- "Zero Sum Game." The Free Dictionary. Farlex‚ n.d. Web. 16 Oct. 2012. <http://www.thefreedictionary.com/Zero sum game>. 8- "A Wisdom Archive on Nash Equilibrium - Notes." Nash Equilibrium. N.p.‚ n.d. Web
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Questions for Critical Thinking 5 Salvatore’s Chapter 10: Discussion Questions: 2 (a) The advantages of the Herfindahl index over concentration ratios is that the former uses information on all the firms in the industry‚ not just information on the market share of the largest 4‚ 8‚ or 12 firms in the industry‚ and gives a larger weight to the larger firms in the industry. (b) The disadvantage of concentration ratios and the Herfindahl index is that for the reasons indicated in Case Study
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One possible application of Game Theory is in advertising. Advertising involves the promotion of products so as to show the product to a greater number of people. The goal of advertising is to make more people aware of a company’s product so t hat more people would avail of this product or service‚ and this would mean more revenues for the company. One way that American Eagle Outfitters can approach this goal is to expand the current market of consumers. This will need directing promotional activities
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| 10 | 14 | 18 | 10 | 1000‚1000 | 1500‚700 | 2000‚0 | 14 | 700‚1500 | 1400‚1400 | 2100‚900 | 18 | 0‚2000 | 900‚2100 | 1800‚1800 | So we can see when they all set the price as $10‚ they can get Nash equilibrium. Neither of them has a dominant strategy. Dominated strategy of supermarket1 is $18‚ and of supermarket 2 is $18 too. The nature of conflict make both of them want to get the largest revenue which is 2100 while the other gets only
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