5 . Individual Problems 15-6

Consider a sequential-move game in which an entrant is considering entering an industry in competition with an incumbent firm. If the entrant does not enter ("Out"), the incumbent firm earns a payoff of 10, while the entrant earns a payoff of 0. If the entrant enters ("In"), then the incumbent can either accommodate or fight. If the incumbent accommodates, both earn a payoff of 5. If the incumbent fights, then the entrant can either leave the industry ("Withdraw") or remain in it ("Stay"). If the entrant stays, both earn a payoff of -5. If the entrant withdraws, the entrant earns a payoff of -1, and the incumbent earns a payoff of 8. The extensive form of the game is depicted in the following figure, where the payoffs are of the form (Entrant Payoff, Incumbent Payoff).

EntrantIncumbent(5,5)(-1,8)(0,10)(-5,-5)InOutAccommodateFightEntrantWithdrawStay

True or False: The equilibrium for this game is {In, Fight, Stay}.

False

True

6 ECN-601 Class Resources X MindTap - Cengage Learning X Homework Help - Q&A from On x * Quiz Introduction to the Study of X + V X G ng.cengage.com/staticb/ui/evo/index.html?deploymentld=5796251885001781434293041 195&eISBN=9781337106603&snapshotld=3305054&id=16976898898 > > CENGAGE | MINDTAP Q Search this course ? Problems: Chapters 15 and 16 X 5 . Individual Problems 15-6 Consider a sequential-move game in which an entrant is considering entering an industry in competition with an incumbent firm. If the entrant does not enter ("Out"), the incumbent firm earns a payoff of 10, while the entrant earns a payoff of 0. If the entrant enters ("In"), then the incumbent can A-Z either accommodate or fight. If the incumbent accommodates, both earn a payoff of 5. If the incumbent fights, then the entrant can either leave the industry ("Withdraw") or remain in it ("Stay"). If the entrant stays, both earn a payoff of -5. If the entrant withdraws, the entrant earns a payoff of - 1, and the incumbent earns a payoff of 8. The extensive form of the game is depicted in the following figure, where the payoffs are of the form (Entrant Payoff, Incumbent Payoff). 1 2 (? (?) Q Entrant In Out Incumbent O Accommodate Fight PDF Quiz_Introduction_..pdf PDF Quiz_Introduction_..pdf Show all X 41'F 10:29 PM O Search ()) O Rain to stop 2/12/20236 ECN-601 Class Resources X MindTap - Cengage Learning X Homework Help - Q&A from Onl x * Quiz Introduction to the Study of X + V X G ng.cengage.com/staticb/ui/evo/index.html?deploymentld=5796251885001781434293041195&eISBN=9781337106603&snapshotld=3305054&id=16976898898