ps8s Duopolies

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Unformatted text preview: te For  ‐10 , ‐10  0 , ‐10  Congressman Beans  Vote Against  ‐10 , 0  20 , 20    b. What is the Nash equilibrium to this game?  The Nash equilibrium is for both Congressmen to vote against the  proposed law.      1  c. Now assume that each Congressman gets a further utility of Ci (that is, CF for  Frank and CB for Beans) for going along with the party leadership.  CF and CB  will be delivered to each Congressman in the form of money for a reelection  campaign, should they vote for the law.  Re‐write the normal‐form game with  these C’s included.    Congressman Frank  Vote For  Vote Against  Vote For  ‐10 + CF , ‐10 + CB  0 , ‐10 + CB  Congressman Beans  Vote Against  ‐10 + CF , 0  20 , 20    d. Derive an expression for each C that describes the minimum utility that the  party leadership has to offer to get Frank and Beans to vote for the law.  In  other words, the party leader wants to set CF and CB such that the Nash  equilibrium is for each Congressman to vote for the law.  There were two ways to approach this problem.    1.  Dominant strategy: find the solution where each congressman will  vote for ...
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## This document was uploaded on 03/27/2014 for the course ECON 115 at Yale.

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