Answered step by step
Verified Expert Solution
Question
1 Approved Answer
4. (20 points) Represent the following games in normal form. Describe, for each game, the set of players, the strategies, and the payoff func- tions.
4. (20 points) Represent the following games in normal form. Describe, for each game, the set of players, the strategies, and the payoff func- tions. Identify the dominated strategies if there are any. (a) Hide and seek. There are three urns on a table, in red, blue, and green, respectively. The hider chooses an urn in which to place a marble ball. Without observing where the hider has hidden the marble ball, the seeker points at one of the urns. If the seeker points at the right one where the marble ball was hidden, she wins 2 dollars from the hider. Otherwise, the hider wins 1 dollar from the seeker. (b) Advertising. Two companies compete to sell their products to consumers. They can either choose to advertise or not to adver- tise. Normalize the population of "persuadable consumers" to 1. The companies each earn 1 unit of profits from capturing 1 unit of such consumers. If both companies choose to advertise, each of them captures 1/2 of those consumers. By contrast, if one com- pany advertises and the other does not advertise, the advertising company captures 2/3 of those consumers and the other company captures 1/4 of those consumers. If neither company advertises, then they each captures 2/5 of all the consumers. The cost of advertising is 1/5
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started