1. We can use game theory to model everyday interactions. Consider a game that you’re well familiar with: The choice of
Posted: Wed Jul 06, 2022 6:21 am
1. We can use game theory to model everyday interactions.Consider a game that you’re well familiar with: The choice of whichside of a hallway to select if someone is coming from the otherdirection and has not yet made their own selection clear. How manyNash equilibria are in this game? Remember, an outcome is a Nashequilibrium if nobody has a profitable unilateral deviation; if noone has reason to be the only one to change what they’re doing.
2. Consider following scenario which we can think of as a gameplayed between two oligopoly firms, Timmer’s snow removal &Jack’s snow removal services. It costs Timmer $200 per customer peryear. It costs Jack’s $225 per customer per year. If the firmscompete by strategically setting prices, what Nash equilibriumprice do we expect? Explain. Remember, an outcome is a Nashequilibrium if nobody has a profitable unilateral deviation; if noone has reason to be the only one to change what they’re doing.
2. Consider following scenario which we can think of as a gameplayed between two oligopoly firms, Timmer’s snow removal &Jack’s snow removal services. It costs Timmer $200 per customer peryear. It costs Jack’s $225 per customer per year. If the firmscompete by strategically setting prices, what Nash equilibriumprice do we expect? Explain. Remember, an outcome is a Nashequilibrium if nobody has a profitable unilateral deviation; if noone has reason to be the only one to change what they’re doing.