Two firms are deciding on whether to build new factories. They can choose whether to build...
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Two firms are deciding on whether to build new factories. They can choose whether to build in an Urban environment, a Suburban environment, or a Rural environment. Payoffs from their decision are in the matrix below. Firm 1 Rural Suburban Urban Rural -1 6 6 -1 4 5 Firm 2 Suburban 6 -1 -1 6 4 5 Urban 5 4 5 4 7 7 a. Is this game dominance-solveable (e.g., can it be solved by identifying dominant strategies or using IEDS)? b. If Firm 1 uses the minimax strategy, what strategy will they employ? c. If Firm 2 uses the minimax strategy, what strategy will they employ? d. Are the combined results from parts b and c a Nash equilibrium? Why or why not? Two firms are deciding on whether to build new factories. They can choose whether to build in an Urban environment, a Suburban environment, or a Rural environment. Payoffs from their decision are in the matrix below. Firm 1 Rural Suburban Urban Rural -1 6 6 -1 4 5 Firm 2 Suburban 6 -1 -1 6 4 5 Urban 5 4 5 4 7 7 a. Is this game dominance-solveable (e.g., can it be solved by identifying dominant strategies or using IEDS)? b. If Firm 1 uses the minimax strategy, what strategy will they employ? c. If Firm 2 uses the minimax strategy, what strategy will they employ? d. Are the combined results from parts b and c a Nash equilibrium? Why or why not?
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students name institution instructors name course title due date a Is this game dominancesolveable eg can it be solved by identifying dominant strategies or using IEDS No this game is not dominancesol... View the full answer
Related Book For
The Economics Of The Environment
ISBN: 9780321321664
1st Edition
Authors: Peter Berck, Gloria Helfand
Posted Date:
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