5 - ECON 3600 Assignment 5 Due Thursday, March 8th. Dynamic...

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ECON 3600 Assignment 5 Due Thursday, March 8th. Dynamic Games 1. Solve the following three-player game using backwards induction: Players are A, B, and C. Payoffs are written as (A's payoff, B's payoff, C's payoff) 2. Stackelberg Competition Two firms are competing over quantities. There is no cost of production and the product is exactly the same whether purchased from Firm 1 or Firm 2. The market demand is: Market Price = 10 – (Q 1 +Q 2 ) a. Assume both firms choose their output quantities simultaneously. Find the Nash equilibrium price and output. Show your work. b. Assume the game is sequential: Firm 1 chooses its output quantity first, then Firm 2 chooses its output quantity. Find the Nash equilibrium price and output. Is there an advantage or disadvantage from choosing first? Show your work. C B A (2, 1, 0) (1, 2, 2) (0, 100, 100) (100, 100,-1)
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3. A Principal-Agent Problem An absentee landlord owns a farm and hires a laborer to work it. The output of the farm as a function of the effort level,
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5 - ECON 3600 Assignment 5 Due Thursday, March 8th. Dynamic...

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