Dominant strategy survive

Assignment Help Macroeconomics
Reference no: EM131179834

In a short 2-3 paragaph response to the following:  

a common resources game that asks "Should we drill another well or not?" Consider this game and describe what the dominant strategy is (as per your text). Consider what will happen if this becomes a repetitive game (both oil companies knowing they will share many oil fields over the next years). Will the dominant strategy survive, and-if not-what strategy could emerge as "best?" based on the scenario below:

A dominant strategy is a strategy that is best for a player in a game regardless of the strategies chosen by the other players (Mankiw, 2015, p. 354). A common resource can throw this off because they are the goods that are rival in consumption but not excludable (Mankiw, 2015, p. 481). In the scenario shown on page 358 of our textbook it lays out the possible outcomes of drilling one well or drilling two wells for two competing companies. The cost for these companies to drill a single well is 1 million dollars and 2 million dollars for two wells. So the potential profit minus cost for either of these companies can range from 3-6 million dollars (Mankiw, 2015, p. 358).

Reference no: EM131179834

Questions Cloud

Charts to display economic data : Write a 1,750-word paper (including any material you include from your Week 3 assignment) detailing your findings. The use of tables and/or charts to display economic data over the time period discussed is highly encouraged.
The estimated cost of common equity to the firm : The common stock for the hetterbrand corporation sells for $60.33 and the last dividend paid was $2.18.Five years ago the firm paid $1.89 per share and dividends are expected to grow at the same annual rate in future as they did over the past five ye..
How effective do you believe your plan will be and why : Professional Reflection that addresses the following questions: How effective do you believe your plan will be and why? What questions or concerns do you anticipate the business or organization might have with regard to your plan? What is your fav..
Effective annual rate under the revolving credit agreement : Cumberland Furniture wishes to establish a prearranged borrowing agreement with a local commercial bank. The bank's terms for a line of credit are 2.80% over the prime rate, and each year the borrowing must be reduced to zero for a 30-day period. Wha..
Dominant strategy survive : Consider what will happen if this becomes a repetitive game (both oil companies knowing they will share many oil fields over the next years). Will the dominant strategy survive, and-if not-what strategy could emerge as "best?" based on the scenari..
Advantages and disadvantages of hiring home country : In staffing a multinational organization for service outside the IC home country, what are some advantages and disadvantages of hiring home country personnel?
Create a storyboard of the website presenting ideas : Create a storyboard of the website presenting ideas for website content, the links, and interconnections. Create visual representations of the home page, node pages, basic pages, and navigational pages.
Characteristics of physical and spiritual aspect of humanity : What might these descriptions of what humans uniquely consist of have to do with the manner in which each person orders his or her life?
What impact do benefit offerings have on marketplace : Consider the cost of benefits in major organizations. What impact do benefit offerings have on marketplace competitiveness and the ability to attract and keep quality employees? Do you think pay is the primary motivating factor for most job appli..

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

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!

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