User Account

All Pages

Determine the critical discount factor

Assignment Help Game Theory
Reference no: EM13983194

1. Let market demand be given by Q = 200 - P. Each firm's cost function is C(qi) = 20qi, where i = 1, 2.

(a) Using the Cournot model, find each firm's output, price and profit.

(b) Suppose that the duopolists collude. Find their joint profit-maximizing price, output, and profit.

(c) Suppose now that each firm has two strategies: Cooperate or Defect. If a firm plays Cooperate, it chooses half of the collusive quantity level in (b).

If a firm plays Defect, it chooses the noncooperative quantity level in (a). Present the 2-by-2 matrix game, determine the Nash equilibrium outcome, and discuss the implications of the outcome.

(d) Suppose the game in (c) is repeated infinitely many times. Each firm has a discount factor δ. Determine the critical discount factor above which cooperation between the two firms can be sustained (i.e., playing grim trigger strategy by both firms is an equilibrium in the repeated game).

Verified Expert

The assignment is related to game theory and consists of 4 game theory problems. The questions are related to Cournot model, collude ,pay off matrix and Nash equilibrium.The discount factor is also calculated for which grim trigger strategy sustains cooperation.

Reference no: EM13983194

Questions Cloud

How many units of each good should it produce per day : Because of commitments to customers, the firm must produce a total of 20 units of the two goods per day. If the firm's managers want to minimize its costs (without violating the commitment to its customers), how many units of each good should it p..
Briefly describe the history of police brutality in america : Police Brutality in America - Briefly describe the history of Police Brutality in America
Calculate the total work done on or by the gas : The initial state of a quantity of monatomic ideal gas is P=1atm V=1liter and T=373K. Calculate the total work done on or by the gas.
What are your thoughts about the impact of cash flow : The success or failure of hospital profitability in the coming years will depend on a continued fluctuation between revenues and costs. What are your thoughts about the impact of cash flow forecasting in hospitals based on utilization, physician c..
Determine the critical discount factor : Determine the critical discount factor above which cooperation between the two firms can be sustained (i.e., playing grim trigger strategy by both firms is an equilibrium in the repeated game).
Define the relationship between culture and technology : Define the relationship between culture and technology and show three examples of this relationship either in history or around us today
How much energy must be added to the system by heat : How much energy must be added to the system by heat as it goes from A through B to C? If the pressure at point A is five times that of point C, what is the work done on the system in going from C to D?
What would be the type i error : Walking along a railroad track in a daydream, suppose you are suddenly aware of a loud noise right behind you. What would be the "type I" error? What would be the "type II" error? Which is more serious? So what would you do?
Discuss the three-stage process of mate selection : What is resource theory? How is resource theory related to who does the housework? Briefly discuss the three-stage process of mate selection described in the text. Do you agree

Reviews

Write a Review

Game Theory Questions & Answers

  Use the best-response approach to find all nash equilibria

Player 1 has the following set of strategies {A1;A2;A3;A4}; player 2’s set of strategies are {B1;B2;B3;B4}. Use the best-response approach to find all Nash equilibria.

  A supplier and a buyer, who are both risk neutral

A supplier and a buyer, who are both risk neutral, play the following game,  The buyer’s payoff is q^'-s^', and the supplier’s payoff is s^'-C(q^'), where C() is a strictly convex cost function with C(0)=C’(0)=0. These payoffs are commonly known.

  Pertaining to the matrix game theory problem

Pertaining to the matrix need simple and short answers, Find  (a) the strategies of the firm (b) where will the firm end up in the matrix equilibrium (c) whether the firm face the prisoner’s dilemma.

  Nash equilibria

Consider the two-period repeated game in which this stage game is played twice and the repeated-game payo s are simply the sum of the payo s in each of the two periods.

  Find the nash equilibrium

Two players, Ben and Diana, can choose strategy X or Y. If both Ben and Diana choose strategy X, every earns a payoff of $1000.

  Construct the payoff matrix for the game

The market for olive oil in new York City is controlled by 2-families, Sopranos and Contraltos. Both families will ruthlessly eliminate any other family that attempts to enter New York City olive oil market.

  Question about nash equilibrium

Following is a payoff matrix for Intel and AMD. In each cell, 1st number refers to AMD's profit, while second is Intel's.

  Finding the nash equilibrium

Determine the solution to the given advertising decision game between Coke and Pepsi, assuming the companies act independently.

  Nash equilibria to determine the best strategy

Little Kona is a small coffee corporation that is planning entering a market dominated through Big Brew. Each corporation's profit depends on whether Little Kona enters and whether Big Brew sets a high price or a low price.

  Creating a payoff table

Suppose you and your classmate are assigned a project on which you will earn one combined grade. You each wish to receive a good grade, but you also want to avoid hard work.

  Determine the nash equilibrium for trade policy

Consider trade relations in the United State and Mexico. Suppose that leaders of two countries believe the payoffs to alternative trade policies are as follows:

  Find the nash equilibrium outcomes

Use the given payoff matrix for a simultaneous move one shot game to answer the accompanying questions.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd