Author Question: What is the dominant strategy for Bob? Donna? Which strategy should each player choose to maximize ... (Read 92 times)

oliviahorn72

  • Hero Member
  • *****
  • Posts: 579
What is the dominant strategy for Bob? Donna? Which strategy should each player choose to maximize the potential gain? What do you think the outcome of this game will be? Carefully explain your answers.
 
  What will be an ideal response?

Question 2

What is the shape of a monopolist's demand curve and marginal revenue curve?
 
  What will be an ideal response?



bfulkerson77

  • Sr. Member
  • ****
  • Posts: 331
Answer to Question 1

The dominant strategy for Bob is to cheat; either he profits by 16,000 (if Donna agrees) or he profits by 4,000 (if Donna also cheats). The alternative of agreeing could profit him by 10,000 (if Donna also agrees), but it could also cause him to lose 4,000 (if Donna cheats). The dominant strategy for Donna is to cheat; either she profits by 16,000 (if Bob agrees) or she profits by 4,000 (if Bob also cheats). The alternative of agreeing could profit her by 10,000 (if Bob also agrees), but it could also cause her to lose 4,000 (if Bob cheats). If Bob thinks Donna will cheat, he should cheat because the potential payoff is greater. If Donna thinks Bob will cheat, she should cheat because the potential payoff is greater. The maximin strategy for both Bob and Donna would be to cheat. If each cheats, their individual profits will be 4,000 .

Answer to Question 2

A monopolist's demand curve and marginal revenue curve are both downward sloping. The two curves begin at the same point on the price axis because the price of the first unit is the marginal revenue from selling the first unit. Thereafter, marginal revenue is below price because the monopolist must lower the price of all units of the good that it sells in order to sell additional units of the good.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

In most climates, 8 to 10 glasses of water per day is recommended for adults. The best indicator for adequate fluid intake is frequent, clear urination.

Did you know?

Walt Disney helped combat malaria by making an animated film in 1943 called The Winged Scourge. This short film starred the seven dwarfs and taught children that mosquitos transmit malaria, which is a very bad disease. It advocated the killing of mosquitos to stop the disease.

Did you know?

Autoimmune diseases occur when the immune system destroys its own healthy tissues. When this occurs, white blood cells cannot distinguish between pathogens and normal cells.

Did you know?

Signs of depression include feeling sad most of the time for 2 weeks or longer; loss of interest in things normally enjoyed; lack of energy; sleep and appetite disturbances; weight changes; feelings of hopelessness, helplessness, or worthlessness; an inability to make decisions; and thoughts of death and suicide.

Did you know?

This year, an estimated 1.4 million Americans will have a new or recurrent heart attack.

For a complete list of videos, visit our video library