Two firms are competing in a market by simultaneously deciding the quality of their manufactured product. The payoff matrix for this competition is depicted in the image. Firm This game can be solved by deleting dominated strategies. Use this tactic to identify all bure-strategy Nash equilibria in this game. Low Medium High 53 54 66 Low A. Firm 1 chooses high and Firm 2 chooses high. 25 34 43 B. Firm 1 chooses low and Firm 2 chooses high. 43 68 77 O C. Firm 1 chooses medium and Firm 2 chooses medium. Firm 2 Medium D. Firm 1 chooses medium and Firm 2 chooses low. 12 45 50 O E. Firm 1 chooses low and Firm 2 chooses low. 74 96 89 F. Firm 1 chooses high and Firm 2 chooses low. High G. Firm 1 chooses medium and Firm 2 chooses high. 39 48 21 H. Firm 1 chooses low and Firm 2 chooses medium. DI. Firm 1 chooses high and Firm 2 chooses medium. ....

Two firms are competing in a market by simultaneously deciding the quality of their manufactured product. The payoff matrix for this competition is depicted in the image. Firm This game can be solved by deleting dominated strategies. Use this tactic to identify all bure-strategy Nash equilibria in this game. Low Medium High 53 54 66 Low A. Firm 1 chooses high and Firm 2 chooses high. 25 34 43 B. Firm 1 chooses low and Firm 2 chooses high. 43 68 77 O C. Firm 1 chooses medium and Firm 2 chooses medium. Firm 2 Medium D. Firm 1 chooses medium and Firm 2 chooses low. 12 45 50 O E. Firm 1 chooses low and Firm 2 chooses low. 74 96 89 F. Firm 1 chooses high and Firm 2 chooses low. High G. Firm 1 chooses medium and Firm 2 chooses high. 39 48 21 H. Firm 1 chooses low and Firm 2 chooses medium. DI. Firm 1 chooses high and Firm 2 chooses medium. ....

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.7P

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10:04 PM cb = Chegg Economics Vo LTE expert.chegg.com/expertqna Time remaining: 00:09:49 Consider the following payoff matrix for two oligopolists that are deciding what quantity to produce: Firm 2 High Quantity Low Quantity $70k; $70k $130k; $20k High Quantity Firm 1 $20k; $130k $100k; $100k Low Quantity In the Nash equilibrium of this game, what are the payoffs to each firm? O a. Firm 1 receives $130k and Firm 2 receives $20k. O b. Firm 1 receives $20k and Firm 2 receives $130k. O c. Firm 1 receives $100k and Firm 2 receives $100k. O d. Firm 1 receives $70k and Firm 2 receives $70k. Answer Skip 4G Exit 2 ¹20%
Consider a sequential-move game in which an entrant is considering entering an industry in competition with an incumbent firm. If the entrant does not enter ("Out"), the incumbent firm earms a payoff of 10, while the entrant earns a payoff of 0. If the entrant enters ("In"), then the incumbent can either accommodate or fight. If the incumbent accommodates, both eamn a payoff of 5. If the incumbent fights, then the entrant can either leave the industry ("Withdraw") or remain in it ("Stay"). If the entrant stays, both earn a payoff of -5. If the entrant withdraws, the entrant earns a payoff of - 1, and the incumbent earms a payoff of 8. The extensive form of the game is depicted in the following figure, where the payoffs are of the form (Entrant Payoff, Incumbent Payoff). Entrant In Out Incumbent Accommodate Fight O Entrant (5,5) (0,10) Stay Withdraw (-5,-5) (-1,8)
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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
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