User Account

All Pages

What is the dominant-strategy equilibrium

Assignment Help Microeconomics
Reference no: EM131612382

Question: If Soapy Inc. and Suddies Inc. play the game in Problem repeatedly, on each round of play:

a. What strategies might each firm adopt?

b. Can the firms adopt a strategy that gives the game a cooperative equilibrium?

c. Would one firm still be tempted to cheat in a cooperative equilibrium? Explain your answer.

Problem: Soapy Inc. and Suddies Inc., the only soap- powder producers, collude and agree to share the market equally. If neither firm cheats, each makes $1 million. If one firm cheats, it makes $1.5 million, while the complier incurs a loss of $0.5 million. If both cheat, they break even. Neither firm can monitor the other's actions.

a. What are the strategies in this game? Construct the payoff matrix for this game.

b. If the game is played only once what is the equilibrium? Is it a dominant-strategy equilibrium? Explain.

Reference no: EM131612382

Questions Cloud

Remember to put that annual interest rate into monthly terms : what would your monthly payment be if you financed rest with 30-year mortgage at annual interest rate of 4.92%? Remember to put that annual nterest rate.
Calculate the percent value of each scenario : Your grandfather would like to share of his fortune with you. Calculate the percent value of each scenario using an 8% discount rate
Analyze the theoretical aspects of research methods : Analyze the theoretical aspects of research methods to include the importance of conducting effective research leading to good decision making.
Define the service style : There are three distinct styles of policing, the watchman style, the legalistic style, and the service style
What is the dominant-strategy equilibrium : Soapy Inc. and Suddies Inc., the only soap- powder producers, collude and agree to share the market equally. If neither firm cheats, each makes $1 million.
Present value of dividends paid on the new shares : What is the total present value of the dividends paid on the new shares? What is value of transfer of ownership from the old shareholders to new shareholders?
Discuss the differences among the three major components : Discuss the differences among the three major components of statistical methodology (descriptive statistics, statistical inference, and predictive statistics).
Process of initial project creation : We have covered the process of initial project creation this week. As you know, the overall goal for this course is the creation of an actual project plan.
What happen to business if ethical standards are not taken : Hawkeye Pierce and BJ Hunnicutt built years of unethical situations on the popular. what can happen to a business if ethical standards are not taken seriously.

Reviews

Write a Review

Microeconomics Questions & Answers

  The free rider problem

Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.

  Failure of the super committee is good thing for economy

Some commentators have argued that the failure of the “Super committee” is good thing for the economy?  Do you agree?

  Case study analysis about optimum resource allocation

Case study analysis about optimum resource allocation: -  Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's productio..

  Fixed cost and vairiable cost

Questions:  :   Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month?  Explain your choice.

  Problem - total cost, average cost, marginal cost

Problem - Total Cost, Average Cost, Marginal Cost: -  Complete the following table of costs for a firm.  (Note: enter the figures in the  MC   column  between  outputs of  0 and 1, 1 and 2, 2 and 3, etc.)

  Oligopoly and demand curve problem

Problem based on Oligopoly and demand curve,  Draw and explain the demand curve facing each firm, and given this demand curve, does this mean that firms in the jeans industry do or do not compete against one another?

  Impact of external costs on resource allocation

Explain the impact of external costs and external benefits on resource allocation;  Why are public goods not produced in sufficient quantities by private markets?  Which of the following are examples of public goods (or services)? Delete the incorrec..

  Shifts in demand and movements along the demand curve

Describe the differences between shifts in demand and movements along the demand curve. What are the main factors which can shift the demand curve? Explain why they cause the demand curve to shift. Use examples and draw graphs to support your discuss..

  Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

  Long-term growth, international trade & globalization

Long-term Growth, International Trade & Globalization:- This question deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade sce..

  European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

  Development game “settlers of catan”

Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"

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: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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