Homework Ch 17 Back To Assignment Attempts Keep The Highest 3 8 Collusive Outcome Versus Nash Equilibrium Consider A 1 (35.17 KiB) Viewed 23 times
Homework Ch 17 Back To Assignment Attempts Keep The Highest 3 8 Collusive Outcome Versus Nash Equilibrium Consider A 2 (35.17 KiB) Viewed 23 times
Homework (Ch 17) Back to Assignment Attempts Keep the Highest/3 8. Collusive outcome versus Nash equilibrium Consider a remote town in which two restaurants, All-You-Can-Eat Café and GoodGrub Diner, operate in a duopoly. Both restaurants disregard health and safety regulations, but they continue to have customers because they are the only restaurants within 80 miles of town. Both restaurants know that if they clean up, they will attract more customers, but this also means that they will have to pay workers to do the cleaning. If neither restaurant cleans, each will earn $12,000; alternatively, if they both hire workers to clean, each will earn only $9,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $16,000, and the other restaurant will make only $4,000. Complete the following payoff matrix using the information just given. (Note: All-You-Can-Eat Café and GoodGrub Diner are both profit-maximizing firms.) All-You-Can-Eat Caté Cleans Up Don't Clean Up $ S Clean Up $ $ GoodGrub Diner Doesn't Clean Up If All You Can Eat Café and GoodGrub Diner decide to collude, the outcome of this game is as follows: All-You-Can-Eat Café GoodGrub Diner and If both restaurants decide to cheat and behave noncooperatively, the outcome reflecting the unique Nash equilibrium of this game is as follows: All- You-Can-Eat Café and GoodGrub Diner Grade It Now Save & Continue Continue without saving
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