Extra questions Week 3

发布时间：2024-06-21

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Extra questions Week 3

1. Considered the following market. Chrome can choose when launching its new product either to do it LARGE or as NICHE. After Chrome has chosen its action, Firefox observes Chrome’s choice and then can choose to ADAPT to RETAIN its own product. After Firefox has chosen its action, the game ends and the payoffs are made. The payoffs are as follows. If Chrome chooses LARGE and Firefox ADAPT, the payoffs are 25 and 40 to Chrome and Firefox, respectively. If Chrome goes LARGE and Firefox RETAINS the payoffs are 30 and 50 to Chrome and Firefox. If Chrome plays NICHE and Firefox ADAPTS, the payoffs are (40 Chrome, 30 Firefox) and if Chrome plays NICHE and Firefox RETAINS the payoffs are (20, 20) for Chrome and Firefox, respectively.

a. What is a Nash equilibrium? Outline the Nash equilibrium or equilibria in the game, and explain your answer.

b. What is a subgame perfect equilibrium, and how would you find it? What is outcome in the subgame perfect equilibrium in this game? Explain your answer.

2. Consider the following situation in an organization, represented by the game below. Workers 1 and 2 choose their actions simultaneously. The first payoff in each square is 1’s payoff; the second is the payoff of player 2. What is the strategy for each worker in the mixed-strategy equilibrium, where α is the probability with which player 1 plays Cooperate and β is the probability 2 plays Cooperate?

a. α * = 1/3; β* = 1/4

b. α * = 2/3; β* = 2/3

c. α * = 2/7; β* = 3/4

d. α * = 1/2; β* = 1/2

e. None of the above.

3. What terms are associated with the architecture of markets?

a. decentralized decision making; automatic; coincidence of specific information and ownership.

b. decentralized decisions; bureaucratic; coincidence of ownership and specific information.

c. centralized decisions; automatic; incentive to maximize value of ownership.

d. decentralized decisions; centralized coordination of actions; information disseminated via the prices.

e. bureaucratic allocation of decision making rights; coincidence of incentives and ownership; information disseminated through the price mechanism.

4. Incentive conflicts require that:

a. A contract is used to achieve the same level of effort achievable when there was no incentive conflict.

b. The parties involved settle for the lowest level of effort from the agent.

c. The principal give up using an agent altogether.

d. The parties will negotiate, but only the principal has an interest in maximizing total surplus.

e. None of the above.