Please answer all questions and provide detailed working for all problems QUESTION 1(16 9 25 POINTS) a team member's dilemma which is an example of a prisoner's dilemma in a single period game but may lead to a high effort outcome in a multi period game Consider a one period game where two team members have two strategies to give high effort or low effort If both give high effort the payoff is $13,000 for each If they both give low effort their payoff is $12,000 each If one gives low effort and the other high effort, the one who gives low effort gets $18,000 and the one who gives high effort gets 4000 Write out a multi period payoff matrix Assume that one who starts with low effort continue with low effort and the others use a tit for tat strategy Compute a break even probability of future interaction that would induce cooperation Explain what this probability means How would the payoffs look like for this probability to be close to zero b What is the role of product differentiation and demand volatility in avoiding the prisoner's dilemma problem in pricing Please refer to the article Dynamics for price competition to support your answer QUESTION 2 (15 POINTS) The reading Pricing the surge discusses Uber's pricing strategy Point out the conditions needed for price discrimination, and explain clearly how the conditions needed for price discrimination are met in this market rlicily uUic sulyc The microeconomics of Uber's attempt to revolutionise taxi markets Finance economics Mar 29th 2014 edition Mar 29th 2014 Give this NEW competitors always ruffle a few feathers The unique thing about Uber, a new taxi market player, is that it seems to have annoyed some of its customers as much as the incumbent cabbies it threatens The problem is its surge pricing

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Please answer all questions and provide detailed working for all problems QUESTION 1(16+9= 25 POINTS) a. team member's dilemma which is an example of a

Please answer all questions and provide detailed working for all problems QUESTION 1(16+9= 25 POINTS)

a. "team member's dilemma" which is an example of a prisoner's dilemma in a single period game but may lead to a high effort outcome in a multi-period game.

Consider a one period game where two team members have two strategies - to give high effort or low effort. If both give high effort the payoff is $13,000 for each. If they both give low effort their payoff is $12,000 each. If one gives low effort and the other high effort, the one who gives low effort gets $18,000 and the one who gives high effort gets 4000.

Write out a multi period payoff matrix. Assume that one who starts with low effort continue with low effort and the others use a "tit for tat" strategy.
Compute a "break-even probability" of future interaction that would induce cooperation.
Explain what this probability means.
How would the payoffs look like for this probability to be close to zero?

b. What is the role of product differentiation and demand volatility in avoiding the prisoner's dilemma problem in pricing? Please refer to the article "Dynamics for price competition" to support your answer.

QUESTION 2 (15 POINTS)

The reading "Pricing the surge" discusses Uber's pricing strategy. Point out the conditions needed for price discrimination, and explain clearly how the conditions needed for price discrimination are met in this market.

rlicily uUic sulyc The microeconomics of Uber's attempt to revolutionise taxi markets Finance & economics Mar 29th 2014 edition Mar 29th 2014 Give this NEW competitors always ruffle a few feathers. The unique thing about Uber, a new taxi-market player, is that it seems to have annoyed some of its customers as much as the incumbent cabbies it threatens. The problem is its \"surge pricing\