What is the subgame perfect nash equilibrium

Assignment Help Econometrics

Reference no: EM131409809

Suppose that an incumbent can commit to producing a large quantity of output before the potential entrant decides whether to enter. The incumbent chooses whether to commit to produce a small quantity, or a large quantity. The rival then decides whether to enter. If the incumbent commits to the small output level and if the rival does not enter, the rival makes $0 and the incumbent makes $900. If it does enter, the rival makes $125 and the incumbent earns $450. If the incumbent commits to producing the large quantity, and the potential entrant stays out of the market, the potential entrant makes $0 and the incumbent makes $800. If the rival enters, the best the entrant can make is $0, the same amount it would earn if it didn't enter, but the incumbent earns only $400. Show the game tree. What is the subgame perfect Nash equilibrium?

Reference no: EM131409809

Questions Cloud

Convert index numbers so that base period will be 1996 : The Producer Price Index values for plumbing fixtures and brass fittings from 1996 through 2001 are shown below. Convert the index numbers so that the base period will be 1996 instead of 1982.

Identify the needs that cause your target market to buy : Identify needs that cause your target market to buy. Describe your target market in detail, including information on the geographic, demographic, psychographic and behavioral factors used to choose your market segment.

What are nash equilibria for the battle of the sexes game : How might you change the game's rules so that it makes more sense? (Hint: In this game, the individuals pick a vacation spot simultaneously without consulting each other.)

How are the given moral values dealt with in other cultures : Choose three American moral values and explain whether or not you think these moral values are universal or uniquely American. How are these moral values dealt with in other cultures?

What is the subgame perfect nash equilibrium : If the rival enters, the best the entrant can make is $0, the same amount it would earn if it didn't enter, but the incumbent earns only $400. Show the game tree. What is the subgame perfect Nash equilibrium?

Should the monopoly buy the machine anyway : If the rival enters, the rival loses $36 and the incumbent makes $132. Show the game tree. Should the monopoly buy the machine anyway?

How many of the animal in the dataset were neutered : How many of the animal in the dataset were neutered? Let's find the variables we need to answer the primary research question. What variable tells us the length of time an animal stayed in the shelter?

Consider your product or service offering : Integrated Marketing Communications. Considering your new target market and any modifications, new product line extensions or new products you may have developed to serve the new target market needs, create your 'Big Idea" to be the basis of the ..

Percentage increase or decrease in executives real earnings : An executive's salary increased from $95,000 to $110,000 between 2000 and 2004, but the Consumer Price Index went from 172.2 to 188.9 during this time span. In terms of real income, what was the percentage increase or decrease in the executive's r..

User Account

All Pages