HW8-2017 - Economics 404 Spring 2017 Industrial...

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Economics 404 Spring 2017 Industrial Organization and Data Science Instructors: Jacob LaRiviere , Affiliate Professor & Senior Researcher, Microsoft Emails: [email protected] Course Assignments & Reading Course assignments should be printed and turned in at the start of class unless otherwise noted. Feel free to work in groups but everyone is required to turn in their own work with answers written in your own words. In both calculations and complex ideas, write down each step of logic used in reaching your conclusion. Keep in mind that in most cases a good answer is one precise sentence; quality is heavily favored over quantity. This will be graded on a full credit, half credit and no credit basis. All work must be typed Week 8, due May 24 Assignment to be turned in. Please turn in typed out answers. Math with pen/pencil OK. 1)Define what a player or firm’s “Best Response” (BR) is to another player’s action.Best Response is action which gives player highest payoff taking actions of the other players as given. a.How is this different from a BR function?Another way of thinking about Nash equilibrium is by thinking about player i’s best-responsefunction Bi(σ−i) = { Player i’s best-response to σ−i } A Nash equilibrium occurs where, foreach playeri, Bi(σ
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