Let the inverse demand function be given by P = 60 - 4Q, where total quantity of a homogeneous
product sold Q = q1 + q2. Costs for each firm include a constant variable cost of 6, a unit
capacity charge of 6, and setup costs of f. The incumbent firm (firm
Dynamic Games of Complete
Information
Application: Hold-up Problem
1
Introduction: holdup problem
Dynamic contract settings often exhibit a particular tension
between individual and joint interests that is due to the
timing of investments and negotiation
Dynamic Games of
Complete Information
Dynamic Games of Complete and
Imperfect Information
1
Outline of dynamic games of complete
information
Dynamic games of complete information
Extensive-form representation
Dynamic games of complete and perfect informat
Static (Simultaneous-Move)
Games of Incomplete
Information
1
Outline of Static Games of Incomplete
Information
n Introduction to static games of incomplete
information
n Normal-form (or strategic-form)
representation of static Bayesian games
n Bayesian Na
ECON 327-11142-3306
SOLUTIONS MIDTERM 2-Fall 2015
NAME:
QUESTION 1 (35 Points)
Consider a market in which there are two firms, both producing the same good. Firm is
cost of producing qi units of product is
Ci (qi ) = qi2
for i = 1, 2.
The price at which o
ASSIGNMENT 4 ECON-327
PROF: EMERSON MELO
Keywords: Incomplete information, Bayesian equilibrium
Date: December 13, 2015 Due date: 12-04-2015 in class.
Department of Economics, Indiana University, Bloomington, IN 47408, USA. Email: [email protected]
1
2
PROF:
ASSIGNMENT 3 ECON-327
PROF: EMERSON MELO
Keywords: Subgame, Subgame perfect equilibrium, Sequential equilibirum
Date: October 30, 2015 Due date:10-23-2015 by noon. Office 307.
Department of Economics, Indiana University, Bloomington, IN 47408, USA. Email:
ASSIGNMENT 2 ECON-327
PROF: EMERSON MELO
Keywords: Pure strategy, mixed strategy, best response functions, Nash equilibrium
Date: September 27, 2015 Due date:09-25-2015 by noon. Office WY307.
Department of Economics, Indiana University, Bloomington, IN 47
EXERCISES TEST 3 ECON-327
PROF: EMERSON MELO
Date: November 26, 2016 .
Department of Economics, Indiana University, Bloomington, IN 47408, USA. Email: [email protected]
1
2
PROF: EMERSON MELO
(1) (Dictator game and impunity game)The dictator game diers from t
Dynamic Games of Complete
Information
Application: Investment/Trust
Games
1
What is Trust?
A relationship of reliance.
Making exchanges with people when you do not
have full knowledge about them, their intent, and
the things they are offering to you.
G
Dynamic Games of
Complete Information:
Applications
1
Stackelberg model
n Cournot model: both firms make their output
decisions simultaneously
n Heinrich von Stackelberg's model: firms act
sequentially
n leader
firm sets its output first
n then its rival
Power to the Patient
Two-Period, Alternating-Offer
Bargaining Games
1
Introduction
n We have just shown how power is being distributed to
the proposer (Player 1).
n The ultimatum game is instructive and applicable, but it is
too simplistic a model of most
Econ 327_Game Theory_Spring 2012
Homework 4
3 problems worth 100 possible points total
Problem 1 (30 points total)
Consider the alternating-offer bargaining game with three periods, in which the
players discount payoffs received in successive stages accor
Econ 327_Game Theory_Spring 2012
Homework 5
2 problems worth 100 possible points total
Problem 1 (60 points total)
Consider the extra credit problem from MT2 (Ive copied it for you again below).
Write out COMPLETE answers and graphs for each of the possib
Econ 327_Game Theory_Spring 2012
Homework 6
2 problems worth 100 possible points total
Problem 1 (55 points total)
Consider the following hold-up game similar to that presented during lecture.
Suppose two people, player 1 and player 2, have the option to
Dynamic Games of
Complete Information
Dynamic Games of Complete and
Imperfect Information
1
Todays Agenda
n Review of previous class
n Game tree representing imperfect information
n Subgame
n Subgame-perfect Nash equilibrium
n Backward induction
2
Dynamic
Dynamic Games of
Complete Information
Dynamic Games of Complete and
Imperfect Information
1
Todays Agenda
n Review of previous class
n Game tree representing imperfect information
n Subgame
n Subgame-perfect Nash equilibrium
n Backward induction
2
Dynamic
Dynamic Games of
Complete Information
Dynamic Games of Complete Information
1
Todays Agenda
n Review of previous class
n Subgame-perfect Nash equilibrium
n Backward induction
2
Dynamic (or sequential-move) games
of complete information
n A set of players
Dynamic Games of
Complete Information
Dynamic Games of Complete Information
1
Todays Agenda
n Review of previous class
n Subgame-perfect Nash equilibrium
n Backward induction
2
Nash equilibrium in a dynamic game
n The set of Nash equilibria in a dynamic g
Dynamic Games of
Complete Information:
One Shot Bargaining Games
1
Value Creation and Division
n Many contracts that people negotiate have to
do with the trade of goods, services, and
money.
n Trade
creates value.
n Creating value Dividing value
n When tw
Dynamic Games of
Complete Information:
One Shot Bargaining Games
1
Value Creation and Division
n Many contracts that people negotiate have to
do with the trade of goods, services, and
money.
n Trade
creates value.
n Creating value Dividing value
n When tw
Econ 327_Game Theory_Spring 2012
Homework 3
100 possible points total
Problem 1 (25 points total)
Answer the following as True, False, or Uncertain. To receive any credit, you must
justify your answer.
Part a (5 points) Backward induction can be applied t