Q1. A and B are the only two sandwich shops serving in a small town. Each...

 

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Q1. A and B are the only two sandwich shops serving in a small town. Each shop can choose to set a high price or a low price for sandwiches. The payoff matrix below shows the daily profit for each combination of prices that the two shops could choose. The first entry shows A's profits, and the second entry shows B's profits. Assuming that both shops know the information shown in the matrix. High Price Low Price Anna a. Does each shop have a dominant strategy to set a high price, a dominant strategy to set a low price, or does it have no dominant strategy? b. If the two shops do not cooperate on setting prices, what will be the profit for each shop? Q2. Anna and Ben are deciding what do at weekend. The matrix below shows the payoff in units of utility from each possible outcome. The first entry is Anna's utility, and the second entry is Ben's utility. A High Price ($105, $110) ($120, $80) Head Tail Sports Movie a. How many pure Nash equilibria are there in this game? List all of them. b. How many pure Nash equilibria are there in this game? List all of them (show your calculation steps). Q3. Suppose two players (A and B) are playing the "matching penny" game. The payoff matrix is depicted below. Player A's payoff is the first entry and Player B's payoff is the second entry. Find the Nash equilibrium (Show Calculation). Ben Sports (10, 20) (3,7) Low Price ($40, $130) ($75, $75) B Head (1,-1) (-1, 1) Movie (3,10) (4,9) Tail (-1, 1) (1,-1) Q1. A and B are the only two sandwich shops serving in a small town. Each shop can choose to set a high price or a low price for sandwiches. The payoff matrix below shows the daily profit for each combination of prices that the two shops could choose. The first entry shows A's profits, and the second entry shows B's profits. Assuming that both shops know the information shown in the matrix. High Price Low Price Anna a. Does each shop have a dominant strategy to set a high price, a dominant strategy to set a low price, or does it have no dominant strategy? b. If the two shops do not cooperate on setting prices, what will be the profit for each shop? Q2. Anna and Ben are deciding what do at weekend. The matrix below shows the payoff in units of utility from each possible outcome. The first entry is Anna's utility, and the second entry is Ben's utility. A High Price ($105, $110) ($120, $80) Head Tail Sports Movie a. How many pure Nash equilibria are there in this game? List all of them. b. How many pure Nash equilibria are there in this game? List all of them (show your calculation steps). Q3. Suppose two players (A and B) are playing the "matching penny" game. The payoff matrix is depicted below. Player A's payoff is the first entry and Player B's payoff is the second entry. Find the Nash equilibrium (Show Calculation). Ben Sports (10, 20) (3,7) Low Price ($40, $130) ($75, $75) B Head (1,-1) (-1, 1) Movie (3,10) (4,9) Tail (-1, 1) (1,-1)

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1 We are given A payoff matrix showing profits of two firms We know A dominant strategy is the strat... View the full answer