32)What is a prisoners' dilemma?A)a game in which players collude to outfox authoritiesB)a game in which prisoners are stumped because they cannot communicate with each otherC)a game that involves no dominant strategiesD)a game in which players act in rational, self-interested ways that leave everyone worse off32)8
Table 13-3Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in themid-sized town of Godrick Hollow. Each firm must decide on whether to increase its advertising spending to compete forcustomers. Table 13-3 shows the payoff matrix for this advertising game.33)Refer to Table 13-3.What is the Nash equilibrium in this game?33)Table 13-4Table 13-4 shows the payoff matrix for Wal-Mart and Target from every combination of pricing strategies for the popularPlayStation 3. At the start of the game each firm charges a low price and each earns a profit of $7,000.34)Refer to Table 13-4.Is the current strategy in which each firm charges the low price and earns aprofit of $7,000 a Nash equilibrium? If not, why and what is the Nash equilibrium?9
35)Refer to Table 13-4.Suppose Wal-Mart and Target both advertise that they will matchthe lowest price offered by any competitor. What is the purpose of such a strategy?35)Figure 13-1A few years ago Netflix (N) pioneered an online DVD rental service. Blockbuster (B), a brick and mortar DVD/video rentalcompany, waited until Netflix had been in business for over a year before deciding whether to establish its own online rentalservice. At this point, Netflix had to decide whether or not to lower its subscription price in order to deter Blockbuster's entryinto the market. Figure 13-1 shows the decision tree for the Netflix-Blockbuster entry game.
You've reached the end of your free preview.
Want to read all 15 pages?