Intel and AMD are the two dominant producers of microchip processors. The following matrix gives the payoffs (in millions of dollars) of the two firms for different combinations of their pricing strategies. The first number is Intel's payoff and the second AMD's. AMD Intel Low Price High Price Low Price 35, 30 30, 60 High Price 70,25 65,55 If this game is played sequentially, the Nash equilibrium will not change irrespective of who moves first. If this one-shot game is repeated for 10 times, the Nash equilibrium is for both firms to choose High Price. ○ In this game, Pareto criterion leads both firms to choose High Price. This game is an example of coordination game.

Intel and AMD are the two dominant producers of microchip processors. The following matrix gives the payoffs (in millions of dollars) of the two firms for different combinations of their pricing strategies. The first number is Intel's payoff and the second AMD's. AMD Intel Low Price High Price Low Price 35, 30 30, 60 High Price 70,25 65,55 If this game is played sequentially, the Nash equilibrium will not change irrespective of who moves first. If this one-shot game is repeated for 10 times, the Nash equilibrium is for both firms to choose High Price. ○ In this game, Pareto criterion leads both firms to choose High Price. This game is an example of coordination game.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 9MC

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Consider the following price game: Firm 1 Firm 2 High Low High 20, 20 12, 24 Low 24, 12 14, 14 Remark: In simultaneous move games (games with rows and columns) theconvention is to write the row player’s payoff first and the column player’spayoff second. (a) What is the Nash equilibrium of this game? Recall that for each playeryou should find the best response to each of the opponents’ strategies andunderline the associated payoff. Then look for a cell where both strategiesare best responses to each other. This is a Nash equilibrium. (b) Does either firm have a dominate strategy (a strategy that is always abest response)?
Intel and AMD are the two dominant producers of microchip processors. The following matrix gives the payoffs (in millions of dollars) of the two firms for different combinations of their pricing strategies. The first number is Intel's payoff and the second AMD's. AMD Intel Low Price High Price Low Price 35, 30 30, 60 High Price 70,25 65,55 O If this game is played sequentially, the Nash equilibrium will not change irrespective of who moves first. If this one-shot game is repeated for 10 times, the Nash equilibrium is for both firms to choose High Price. O In this game, Pareto criterion leads both firms to choose High Price. This game is an example of coordination game.
Is this strategy a sub-game perfect Nash Equilibrium? Player 2: a c e Player 1: A DE C 2 True False A d B e a 2 1 2 1 A D E חח 0 0 1 F -1 1000
20) Given the payoff matrix in the figure, the Nash equilibrium outcome of this game is for: Ajinomoto Produce 30 Produce 40 million pounds million pounds Ajinomoto makes $180 million Ajinomoto makes $200 million Produce 30 million ADM makes $180 million ADM makes $150 million pounds Ajinomoto makes $150 million Ajinomoto makes $160 million Produce 40 million ADM makes $200 million ADM makes $160 million pounds O A. each firm to produce 30 million pounds. B. each firm to produce 40 million pounds. C. ADM to produce 30 million pounds and for Ajinomoto to produce 40 million pounds. D. ADM to produce 40 million pounds and for Ajinomoto to produce 30 million pounds. ADM
Consider this as a simultaneous-move (static) game: Player A Top Bottom Player B Left Right ETEL UU 1.b) Does any player have a dominant strategy in this game? Explain. 1.a) Write down the Best Response Correspondence for each of the two players. Molimonsbestich Quinit 1.c) Find all Nash Equilibria in pure strategies of this game. 1.d) Is there any Nash Equilibria in mixed strategies? If so, find it. Elekt
2. Brad and Angelina have agreed to meet up for their first date. Neither of them can remember the exact location where they arranged to meet up and have forgotten their phones at home. Their payoff matrix can be described as follows: Brad The Hive Le Monde a) What is the Nash equilibrium in this game? Angelina The Hive 5; 5 0; 0 Le Monde 0; 0 5; 5
The table given below represents the payoff matrix of firms A and B, when they choose to produce low or high output. In each cell, the figure on the left indicates Firm B's payoffs and the figure on the right indicates Firm A's payoffs. Firm A Firm B Low Output High Output Low Output 60 50 20 10 High Output 30 40 40 30 Which of the following statements about the two firms must be true? 1. If Firm B produces low output, Firm A will also produce low output. 2. If Firm B produces high output, Firm A will produce low output. 3. If Firm A produces high output, Firm B will also produce high output. 4. If Firm A produces low output, Firm B will produce high output.
2: Provide a definition for a Nash equilibrium and then find all pure-strategy Nash equilibria of the following game: Left Center Right Up Middle 1,3 2,7 6,3 2,9 4,4 7,10 Down 3,8 2,5 3,4
Keith and Blake play a simultaneous one-shot game given by the following table: Blake Left Right Тop 5.00. -5.00 0.00, -6.00 Kelth Bottom 6.00,0.co -2.00, 8.00 As there is no unique pure strategy Nash equilibrium, assume that each player plays each of his chcices half of the time. What is the average payoff for Keith? (Round to two decimals if necessary.) What is the aver age payoff for Blake? |(Round to two decimals if necessary)
The following table contains the possible actions and payoffs of players 1 and 2. Player 1 U M D L 2,10 2,5 8,7 Player 2 C 5,2 11,8 8,4 R 5,4 2,9 8,3 This is a simultaneous move game. In a pure strategy Nash equilibrium of this game, Player 1 receives a payoff of ✓and player 2 receives a payoff of If, instead of playing simultaneously, player 2 moves first, then in the Nash equilibrium player 1 receives a payoff of ✓and player 2 receives a payoff of
Two firms, X and Y, are involved in a price war. The demand equations for each firm are the following: Qx = 52 - 2Px + Py Qy = 52 - 2Py + Px Further, assume the cost of each unit of out is constant at $4. What is the Nash equilibrium of this game? (Use the best response functions in a graph to answer) There is no Nash equilibrium O $24 $20 $22