![]() + qn The cost for an individual company is given by Ci = c.qi. Thus the Nash Equilibrium is S1 + S2 = 1.Īnswer 1.4 The market price of the commodity is determined by the formula P = a □ Q in which Q is determined Q = q1 +. ![]() We know this because if S2 1 -S1, Individual 2 earns nothing and can increase his payoff by reducing his demands sufficiently. ![]() What are the pure-strategy Nash equilibria of thisĪnswer 1.3 For whatever value Individual 1 chooses (denoted by S1), Individual 2’s best response is S2 = B2(S1) = 1 - S2. This manual was typeset by the author, who is greatly indebted to Donald Knuth (TEX), Leslie Lamport (LATEX), Diego Puga (mathpazo), Christian Schenk (MiKTEX), Ed Sznyter (ppctr), Timothy van Zandt (PSTricks), and others, for generously making superlative software freely available. An Introduction to Applicable Game Theory by Robert Gibbons. The Nash Equilibrium are (T,R) and (M,L).ġ.3 Players 1 and 2 are bargaining over how to split one dollar.īoth players simultaneously name shares they would like to have s1 and s2, where 0 1, then both players The strategies (T,M) and (L,R) survive the iterated elimination of strictly dominated strategies. 1.2 In the following normal-form game, what strategies survive iterated elimination of strictly dominated strategies? What are the pure-strategy Nash equilibra?Īnswer 1.2 B is strictly dominated by T.
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