Social Interactions Consider two companies who advertise to attract the same customers. If neither company advertises the companies split the market. If both advertise they also split the market, but profits are ower, since each company must spend on advertising. But if one company advertises and the other does not, the one that advertises attracts customers from the other. The game is represented in the following table: Firm B Advertise Don't Advertise Advertise Firm A gets $3M Firm A gets $5 M Firm A Firm B gets $3 M Firm B gets $2 M Don't Advertise Firm A get $2 M Firm A gets $4 M Firm B gets $5 M Firm B gets $4 M
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q60c- Is the Nash equilibrium the best outcome for this problem? Explain
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- Use the payoff matrix below to answer the next two questions. a. b. C. d. Topco does not advertise a. b. Topco advertises C. d. Acme does not advertise Both firms earn profits of $50 million. 30. Suppose Acme and Topco must choose whether or not to advertise without knowing what the other will do. In the Nash equilibrium: Topco earns profits of $60 million and Acme earns profits of $30 million. Acme advertises Topco earns profits of $30 million and Acme earns profits of $60 million Both firms earn profits of $40 million. 31. Which strategies maximize Acme's and Topco's combined profit? Neither advertises neither Acme nor Topco chooses to advertise. both Acme and Topco choose to advertise. Acme advertises, but Topco does not. Topco advertises, but Acme does not. Both advertise Acme advertises, but Topco does not Topco advertises, but Acme does not. OPEC, the Organization of Petroleum Exporting Countries, was founded in 1969. Their original objective was to form a cartel to increase the price that they receive for their oil exports. Create a prisoner’s dilemma type game for two large members of OPEC (e.g. Saudi Arabia and Indonesia). Create numbers, where payoffs are total annual oil export revenues for each of these two countries. Verbally explain how you got your numbers. Find the Nash equilibrium. Based on this model, what strategy is in the oil exporters’ best interest (Nash or otherwise)? How do they make it happen? Create another prisoner’s dilemmamodel for all of OPEC on one side, and all non OPEC oil exporting nations on the other side. Create numbers, where payoffs are total annual oil export revenues for each of the two sides. Verbally explain how you created your numbers. Also create your numbers applying the fact that OPEC’s total production capacity is greater than total non OPEC exports…Firm A Strategy Advertise Don't Advertise Firm B Advertise 0,0 -1,40 Don't Advertise 40, -1 10, 10 Two cigarette manufacturers play the following simultaneous-move billboard advertising game. Profit payoffs for both companies are shown in the normal form game below. There is a 20 percent chance that the government will ban cigarette sales in any given year. If they collude and Firm A cheats, how much will Firm A earn in period 1? (Enter a numerical value as your answer with no decimal points. For example, if your answer is "one hundred" you need to type in "100"). What is the probability that the game will end? (Enter a numerical value as your answer with no decimal points. For example, if your answer is "one hundred percent" you need to type in "100"). If they collude and Firm A cheats, what will be the profit for Firm A for all periods? (Enter a numerical value as your answer with no decimal points. For example, if your answer is "one hundred" you need to type in "100"). If they…
- Beta's Price Policy High Low A B $20 $30 High Alpha's $20 $10 Price Policy C $10 D $ $15 Low $30 $15 Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. With independent pricing, the outcome of this duopoly game will gravitate to cellWhat is the Nash equilibrium? a) Both firms advertise. b) Both firms do not advertise c) Firm 1 advertises and Firm 2 does not. d) No Nash equilibrium for this game. e) Firm 2 advertises and Firm 1 does not. Suppose Firm 1 gets 2 instead of 4 when both firms advertise. What is the Nash equilibrium? a) Firm 1 advertises and Firm 2 does not. b) No Nash equilibrium for this game. c) Both firms advertise d) Firm 2 advertises and Firm 1 does not e)Both firms do not advertiseconside the following game There are two companies that sell Haitian coffee.Each company currently makes $5 million in revenue They need to determine whether they should engage in a social media advertising campaign Advertising costs $2 million for each company If one company advertises and the other does not, then the one that advertises captures $3 million from the company that does not. If both companies advertise they gain nothing. Draw the payoff matrix. What is this games Nash equilibrium
- If you advertise and your rival advertises, you each will earn $4 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $1 million and the non-advertising firm will earn $5 million. If you and your rival plan to be in business for only one year, the Nash equilibrium is Group of answer choices for each firm to advertise. for neither firm to advertise. for your firm to advertise and the other not to advertise. none of the provided answers. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Find all of the Nash equilibrium of the following three player game. Player 1 chooses rows (a,b). Player 2 chooses columns (c,d). Player 3 chooses matrices (x.y). Player 3 receives the third listed payoff for cach outcome. 5,5,5 4,4,0 8,8,3 7,7,3 1,3,1 4,2,0 3,2,4 3,1,0 a by A) (b,d.x) and (a,d.y) B) (b.cy) OC) (b,d,x) D) (a,d,x) and (b,c.y) E) (b,c,x) OF) (a,d.x)The following payoff table lists the profits of a buyer and a seller. The seller acts first by choosing a sale price ($9, $8, or $6). The buyer then decides the quantity of the good to purchase (two units, four units, six units, or eight units). a. Suppose the buyer and seller transact only once. Does the buyer have a dominant strategy? Depending on the price quoted, what is his best response? What price should the seller set? Explain carefully. Buyer Quantities 2 Units 4 Units 6 Units 8 Units P $9 10, 6 20, 5 30, 0 40, 8 Seller P $8 8, 8 16, 9 24, 6 32, 0 Prices P $6 4, 12 8, 17 12, 18 16, 16 b. Suppose the seller and buyer are in a multiyear relationship. Each month, the buyer quotes a price and the seller selects her quantity. How might this change each player’s behavior? c. Now suppose the buyer and seller are in a position to negotiate an agreement specifying price and quantity. Can they improve on the result in part (a)? Which quantity should they set? What price would be…
- Problem 2. Consider the game below. Player 2 C L R T (2, 1) (0, 2) (0,3) (1,1)| (1,1)|(1,0) Player 1 M B (0, 1) (2, 0) (2, 2) (a) Are there any dominant or dominated strategies? (b) Report the best responses AND find the Nash equilibrium.Profits for two competing firms depend on the decisions to advertise or not to advertise as follows: If neither firm advertises, each makes a weekly profit of $100. If one firm advertises while the other does not, the firm that advertises makes $120 while the firm that doesn’t advertise makes $60. If both firms advertise, each firm makes $80. (a) What is the Nash equilibrium? Is this outcome efficient, from the perspective of the two firms? (b) How does the outcome of the game change if the parties can make a binding agreement in advance about advertising practices? (c) How does the game change if it is repeated over the course of many weeks (but the firms cannot make a binding agreement about how much advertising they will do)?Dairy King Advertise Doesn't Advertise Advertise 7,7 12, 3 Creamland Doesn't Advertise 3, 12 10, 10 For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $12 million, and Dairy King will make a profit of $3 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. If Creamland decides to advertise, it will earn a profit of not advertise. million if Dairy King advertises and a profit of million if Dairy King does If Creamland decides not to advertise, it will earn a profit of does not advertise. million if Dairy King advertises and a profit of million if Dairy King If Dairy King advertises, Creamland makes a higher profit if it chooses If Dairy King doesn't advertise, Creamland makes a higher profit if it chooses Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing? ◇ Creamland will…