**Unformatted text preview: **In this special case, payoffs are in terms of money, and therefore “utility” can be transferred from one player to the other by passing dollars between them. In this case, it does make sense to add the payoffs together to find the efficient production level. You can do this to find the efficient level of production for these two firms. In this case, the efficient level of production is a unique point, rather than a set of points on the line. Why? 4. An outcome is rationalizable if the each of the strategies in the strategy profile that gave rise to the outcome is rationalizable. Note that each of Row’s strategies are a best response to some strategy of Column’s. What does that say about the rationalizability of Row’s strategies? What about Column?...

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- Fall '07
- Emre
- Game Theory, Utility, best response, best response functions, efficient production level, utility level increases