Determine the equilibrium outcome

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Reference no: EM1316270

1. Describe a sequential game facing your firm, and represent it in extensive or tree form. Compute and analyze the equilibrium of the game. What advice can you derive from your analysis? Compute the profit consequences of the advice.

2. Describe a repeated bargaining game your firm faces, compute and analyze the equilibrium of the game, and explicitly show how it differs from the one-shot (nonrepeated) equilibrium. What advice can you derive from your analysis? Compute the profit consequences of the advice.

3. You want to invest in a hot stand near the ballpark. You have a .35 probability that you can turn your current $15,000 into $50,000 and a .65 probability that fierce competition will drive you to ruin, losing all your money. If you decide not to enter, you keep your $15,000. Would you enter the market, why or why not?

Reference no: EM1316270

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