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Unformatted text preview: Question 1: Dominance The following table shows only player 1’s payoffs. Find a strictly dominated action in player 1’s action set. left right up 1 0 middle 2 1 down 1 3 Answer to question 1 Up is strictly dominated by middle. No other action is strictly dominated by another. Question 2: Multiple Nash equilibrium Two people wish to go out together. Two concerts are available: one by Mandoza; the other by the Springbok Nude Girls. One person prefers Mandoza; the other the Springbok Nude Girls. If they go to different concerts, each of them is equally unhappy listening to either performer. a) Represent the situation through a strategic game table b) Find all Nash equilibria Answer to question 2 See fig19.1, page 19; and section 2.7.2 in Osborne. Question 3: Cournot, monopoly and industry profits Consider an industry with two firms, producing an homogeneous good, and faced by the inverse demand function P ( Q ) = α − Q Where . Suppose 2 1 q q Q + = 100 = α and each firm has constant marginal...
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This note was uploaded on 05/23/2011 for the course ECON 203 taught by Professor Jules during the Spring '11 term at University of Cape Town.
- Spring '11