Few questions about Game Theory

timer Asked: Jul 4th, 2018
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Question description

Few questions about Game Theory.

The questions are in the attached files.

Some of them could be found in Google.

I guess it’s from some textbook.

The questions are not difficult

Q1. Q2. Yuppietown has two food stores, La Boulangerie, which sells bread, and La Fromagerie, which sells cheese. It costs $1 to make a loaf of bread and $2 to make a pound of cheese. If La Boulangerie’s price is P1 dollars per loaf of bread and La Fromagerie’s price is P2 dollars per pound of cheese, their respective weekly sales, Q1 thousand loaves of bread and Q2 thousand pounds of cheese, are given by the following equations: Q1=10-P1-0.5P2 ; Q2=12-0.5P1-P2 (a) For each store, write its profit as a function of P1 and P2 . Then find their respective best-response rules. Graph the best-response curves, and find the Nash equilibrium prices in this game. (b) Suppose that the two stores collude and set prices jointly to maximize the sum of their profits. Find the joint profit-maximizing prices for the stores. Q3. Consider the simultaneous-move game with two players that has no Nash equilibrium in pure strategies. If the game were transformed into a sequential-move game, would you expect that game to exhibit a first-mover advantage, a second-mover advantage, or neither? Explain your reasoning. Q4.

Tutor Answer

School: UT Austin

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Wow this is really good.... didn't expect it. Sweet!!!!

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