There is a society of seven individuals, 1,2,3,4,5,6,7), who are connected in a social network as...

Transcribed Image Text:

There is a society of seven individuals, 1,2,3,4,5,6,7), who are connected in a social network as below. If there is a link between two individuals, then that pair of individuals are friends. If there is no link between two individuals, then that pair are not friends. All individuals like Netflix. Specifically, if someone views Netflix they get a benefit of 1. However, Netflix is costly which is bad. To purchase a Netflix account costs c (0,1). Netflix allow multiple devices to stream simultaneously. This means that if some individual purchases a Netflix account, then he/she will share with all of his/her friends. Each individual has strategy set {p.n} where p means to purchase a Netflix account and n means to not purchase. The payoff to individual i depends directly on what his/her friends do. Writing s, for the strategy of person i, and for the vector of strategies of everyone other than i, the payoff to person i, (8, 8) is zi(n, 5-1) = { } 6 1, if some friend chose to purchase an account 0, if no friend chose to purchase an account (p. 8) = 1-c, for all s (a) Answer the following. i. Does any player have a dominant strategy (strictly or weakly)? If yes, what is it? If not, say why not. (2 Marks) ii. Does any player have a dominated strategy (strictly or weakly)? If yes, what is it? If not, say why not. (2 Marks) iii. Find all the pure strategy Nash equilibria. (Either write out mathematically or depict graphically.) (6 Marks) There is a society of seven individuals, 1,2,3,4,5,6,7), who are connected in a social network as below. If there is a link between two individuals, then that pair of individuals are friends. If there is no link between two individuals, then that pair are not friends. All individuals like Netflix. Specifically, if someone views Netflix they get a benefit of 1. However, Netflix is costly which is bad. To purchase a Netflix account costs c (0,1). Netflix allow multiple devices to stream simultaneously. This means that if some individual purchases a Netflix account, then he/she will share with all of his/her friends. Each individual has strategy set {p.n} where p means to purchase a Netflix account and n means to not purchase. The payoff to individual i depends directly on what his/her friends do. Writing s, for the strategy of person i, and for the vector of strategies of everyone other than i, the payoff to person i, (8, 8) is zi(n, 5-1) = { } 6 1, if some friend chose to purchase an account 0, if no friend chose to purchase an account (p. 8) = 1-c, for all s (a) Answer the following. i. Does any player have a dominant strategy (strictly or weakly)? If yes, what is it? If not, say why not. (2 Marks) ii. Does any player have a dominated strategy (strictly or weakly)? If yes, what is it? If not, say why not. (2 Marks) iii. Find all the pure strategy Nash equilibria. (Either write out mathematically or depict graphically.) (6 Marks)

Answer rating: 100% (QA)

To analyze the given scenario lets consider each players strategies and payoffs Player 1 Strategy set p np p purchase Netflix account np not purchase ... View the full answer