Chap_10_Solutions_Odd

Chap_10_Solutions_Odd - Chapter 10: Answers to Questions...

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Chapter 10: Answers to Questions and Problems 1. a. Player 1’s dominant strategy is B. Player 2 does not have a dominant strategy. b. Player 1’s secure strategy is B. Player 2’s secure strategy is E. c. (B, E). 2. 3. a. Player 1’s optimal strategy is B. Player 1 does not have a dominant strategy. However, by putting herself in her rival’s shoes, Player 1 should anticipate that Player 2 will choose D (since D is Player 2’s dominant strategy). Player 1’s best response to D is B. b. Player 1’s equilibrium payoff is 5. 4. 5. a. x > 2. b. x < 2. c. x < 2. 6. 7. a. Player 1 has two feasible strategies: A or B. Player 2 has four feasible strategies: (1) W if A and Y if B; (2) X if A and Y if B; (3) W if A and Z if B; (4) X if A and Z if B. b. (60, 120) and (100, 150). c. (100, 150). 8. 9. The normal form game looks like this: Notice that there are two Nash equilibria: (Sale, Regular) and (Regular, Sale) with profits of ($5, 3) and ($3, $5), respectively. Thus, there is not a clear-cut pricing strategy for either firm. One mechanism that might solve this problem is to advertise
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Chap_10_Solutions_Odd - Chapter 10: Answers to Questions...

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