Intel and AMD are the two dominant producers of microchip processors. The following matrix givesthe payoffs (in millions of dollars) of the two firms for different combinations of their pricingstrategies. The first number is Intel's payoff and the second AMD's.AMDIntel Low PriceHigh PriceLow Price35, 3030, 60High Price70,2565,55O If this game is played sequentially, the Nash equilibrium will not change irrespective of who moves first.If this one-shot game is repeated for 10 times, the Nash equilibrium is for both firms to choose High Price.O In this game, Pareto criterion leads both firms to choose High Price.This game is an example of coordination game.

The Nash equilibrium is the optimal outcome of a game where no player has an incentive to deviate…

Intel and AMD are the two dominant producers of microchip processors. The following matrix gives the payoffs (in millions of dollars) of the two firms for different combinations of their pricing strategies. The first number is Intel's payoff and the second AMD's. AMD Intel Low Price High Price Low Price 35, 30 30, 60 High Price 70,25 65,55 If this game is played sequentially, the Nash equilibrium will not change irrespective of who moves first. If this one-shot game is repeated for 10 times, the Nash equilibrium is for both firms to choose High Price. In this game, Pareto criterion leads both firms to choose High Price. O This game is an example of coordination game.

Intel and AMD are the two dominant producers of microchip processors. The following matrix gives the payoffs (in millions of dollars) of the two firms for different combinations of their pricing strategies. The first number is Intel's payoff and the second AMD's. AMD Intel Low Price High Price Low Price 35, 30 30, 60 High Price 70,25 65,55 If this game is played sequentially, the Nash equilibrium will not change irrespective of who moves first. If this one-shot game is repeated for 10 times, the Nash equilibrium is for both firms to choose High Price. In this game, Pareto criterion leads both firms to choose High Price. O This game is an example of coordination game.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 9MC

See similar textbooks

Similar questions

The table given below represents the payoff matrix of firms A and B, when they choose to produce low or high output. In each cell, the figure on the left indicates Firm B's payoffs and the figure on the right indicates Firm A's payoffs. Firm A Firm B Low Output High Output Low Output 60 50 20 10 High Output 30 40 40 30 Which of the following statements about the two firms must be true? 1. If Firm B produces low output, Firm A will also produce low output. 2. If Firm B produces high output, Firm A will produce low output. 3. If Firm A produces high output, Firm B will also produce high output. 4. If Firm A produces low output, Firm B will produce high output.
Two firms, X and Y, are involved in a price war. The demand equations for each firm are the following: Qx = 52 - 2Px + Py Qy = 52 - 2Py + Px Further, assume the cost of each unit of out is constant at $4. What is the Nash equilibrium of this game? (Use the best response functions in a graph to answer) There is no Nash equilibrium O $24 $20 $22
2: Provide a definition for a Nash equilibrium and then find all pure-strategy Nash equilibria of the following game: Left Center Right Up Middle 1,3 2,7 6,3 2,9 4,4 7,10 Down 3,8 2,5 3,4
Is this strategy a sub-game perfect Nash Equilibrium? Player 2: a c e Player 1: A DE C 2 True False A d B e a 2 1 2 1 A D E חח 0 0 1 F -1 1000
O Cell A O Cell C O Cell E O Cell I None of the above
Solving for dominant strategies and the Nash equilibrium Suppose Felix and Janet are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Felix chooses Right and Janet chooses Right, Felix will receive a payoff of 3 and Janet will receive a payoff of 7. Attached the table The only dominant strategy in this game is for (Janet / Felix) to choose (Left / Right). The outcome reflecting the unique Nash equilibrium in this game is as follows: Felix chooses (Left / Right) and Janet chooses (Left / Right).
2. Brad and Angelina have agreed to meet up for their first date. Neither of them can remember the exact location where they arranged to meet up and have forgotten their phones at home. Their payoff matrix can be described as follows: Brad The Hive Le Monde a) What is the Nash equilibrium in this game? Angelina The Hive 5; 5 0; 0 Le Monde 0; 0 5; 5
What is the outcome of the subgame-perfect Nash-equilibrium in the game below? 1 Attack Retreat 2 Defend Flee Follow Stay 5/4 8/6 7/7 10/ 10
how many Nash equilibrium/equilibria are there in this game? please refer to figure provided
Consider a market with two firms, Kellogg and Post, that sell breakfast cereais. Both companies must choose whether to charge a high price ($5.00) or a low price ($3.00) for their cereals. These price strategies, with corresponding profits, are depicted in the payoff matrix to the right. Kellogg's profits are in red and Post's are in blue. What is the cooperative equilibrium for this game? Kelogg Price- $5.00 Price $3.00 OA The cooperative equilibrium is for Kelogg to choose a price of $3.00 and Post to choose a price of $5.00. OB. The cooperative equilibrium is for Kellogg and Post to both choose a price of $3.00. OC. The cooperative equilibrium is for Kellogg and Post to both choose a price of $5.00. OD. The cooperative equilibrium is for Kellogg to choose a price of $5.00 and Post to choose a price dk $3.00. OF Acooperative equilibrium does not exist for this game 00 Price= $5.00 1200 S000 $1.000 Post Is the cooperative equilibrium ikely to occur? $1.000 Price $3.00 450 The…
Suppose there are two computer companies, Bippo and Macrohard, who choose from one of two incompatible CPU frame technologies, Chip A and Chip I. The payoff matrix is, Macrohard Chip A Chip I Assume positive payoff Chip A 5+x, 7+y 8, 10 Chip I 10, 8 4+a, 4+b Bippo Find the range of x, y, a, b to make (Chip A, Chip A) a unique Nash equilibrium. Find the range of x, y, a, b to lead to an agreement on compatibility that two firms only choose Chip I. Find the range of x, y, a, b that two firms start a standard war. Suppose x=5, y-0, b-3, find the range of a to make a scenario of asymmetric firms. а. b. с. d.
Player 2 X Y Player X (3,3) (0,4) 1 Y (4,0) (2,2) Figure 9.18 Find all the subgame perfect Nash equilibria of this supergame. Also, briefly explain why each one is subgame perfect.