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W AutoSave Off abc NBS-5102A-AUG-ODR-V2 v Search (Alt+Q) Alwin Jacob AJ X File Home Insert Draw Design Layout References Mailings Review View Help Comments Share Aria * 12 ~ A" A Aa Ap Find Normal No Spacing Heading 1 Heading 2 Replace Paste BIUvab x x A LAB = = ~ ~ Dictate Sensitivity Editor Select v Undo Clipboard Font Paragraph Styles Editing Voice Sensitivity Editor 1 . 1 . 1 . 1 . 1 . . 1 . 1 41 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 . 10 . 1 . 11 . 1 . 12 . 1 . 13 . 1 . 14. 1 . 15 . 1 . 1 . 1 . 1 . 1. 5 NBS-5102A Version 2 Question 3 (a) Consider the following one-shot game. Firm B Low price High Price Firm A Low price 200, 200 400, 150 High price 150, 400 300, 300 (i) What type of game is this? [1 mark] (ii) Define the concept of Nash equilibrium [1 mark] (ii) Reproduce the game in your response and use best response analysis to find the Nash Equilibria of this game. [4 marks] (h) Sunnose now that the name in part (a) is plaved an infinite number of times Page 4 of 12 2403 words CX Text Predictions: On Fox Accessibility: Investigate " Focus + 100% : 23 C P 11:31 Raining now 16/08/2022W AutoSave Off abc NBS-5102A-AUG-ODR-V2 v Search (Alt+Q) Alwin Jacob AJ X File Home Insert Draw Design Layout References Mailings Review View Help Comments Share * 12 ~ A" A" Aa Ap Find Aria Normal No Spacing Heading 1 Heading 2 Replace Paste BI U~ ab x x A LA Dictate Sensitivity Editor Select v Undo Clipboard Font Paragraph Styles Editing Voice Sensitivity Editor 1 . 1 . 1 . 1 . 1 . ) . 1 . 1 4 1 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 . 10 . 1 . 11 . 1 . 12 . 1 . 13 . 1 . 14. 1 . 15 . 1 . . . 1 . . (i) What type of game is this? [1 mark] (ii) Define the concept of Nash equilibrium [1 mark] (iii) Reproduce the game in your response and use best response analysis to find the Nash Equilibria of this game. [4 marks] (b) Suppose now that the game in part (a) is played an infinite number of times. Both firms realise that collectively they would be better off setting a high price. Firms may be able to establish cooperation using various strategies. Define what is meant by grim trigger and tit-for-tat strategies. [4 marks] (i) Suppose Firm B is able to credibly commit to a Grim Trigger Strategy. Calculate the discount factor o such that Firm A cooperates. [6 marks] (iii) Suppose Firm B, instead commits to a tit-for-tat strategy. Calculate the discount factor o necessary such that Firm A cooperates. [4 marks] Total: 20 marks Page 5 of 12 2403 words CX Text Predictions: On fox Accessibility: Investigate " Focus + 100% : 23.C P Raining now O W 11:32 16/08/2022