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For each of the three games below:




11.docx;1. For each of the three games below;a. Find the dominant strategy for each player and the dominant strategy solution, if one exists. If;a dominant strategy solution exists is each players strategy weakly dominant or strongly;dominant?;b. If the players do not have a dominant strategy, use iterated elimination of (weakly) dominated;strategies (IEDS) to find a solution. Can you find a single undominated strategy for each player?;c. Find all the NE solution(s) for each game. Is(are) the NE solution(s) the same as the dominant;strategy solution or the IEDS solution?;Game 1;U;Player 1;D;L;1, 1;M;3, 1;Player 2;C;R;1, 2;0, 1;0, 0;1, 2;2, 3;1, 2;L;2, 0;M;1, 1;Player 2;C;R;1, 2;3, 1;0, 2;3, 3;3, 0;1, 3;L;1, 1;M;2, 2;Player 2;C;R;2, 1;0, 2;1, 2;2, 2;1, 1;2, 1;Game 2;U;Player 1;D;Game 3;U;Player 1;D;0, 1;2, 1;2, 0;2. Can you find a NE solution for the following game?;Game 4;Player 1;D;Player 2;L;R;U;1, 1;0, 2;2, 1;0, 2;3. Suppose there are 2 firms that produce two similar drugs for the flu, drug A and drug B.;The demand curve for Drug A is qA = 15 2pA + pB;The demand curve for Drug B is qB = 15 2pB + pA;The cost to produce the drug for each Firm is 0.;a. What is the profit function for each firm?;b. What is the reaction function for each firm?;c. What is the NE solution, price pA and price pB, set by Firm A and Firm B?;d. If Firm A and Firm B agree on prices (and are able to commit to those prices), what prices;would they set for drug A and drug B? How do these prices differ from the prices in part (c)?;e. Show that the price set in part (d) is not a NE solution for the two separate firms.


Paper#31038 | Written in 18-Jul-2015

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