Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer correct explain plz asap both are questions Don't answer by pen paper plz The table below is the payoff matrix for a simple

Please answer correct explain plz asap both are questions

Don't answer by pen paper plz

image text in transcribed
The table below is the payoff matrix for a simple two-firm game. Firms A and B are bidding on a government contract, and each firm's bid is not known by the other firm. Each firm can bid either $14,000 or $6,000. The cost of completing the project for each firm is $3,000. The low-bid firm will win the contract at its stated price; the high-bid firm will get nothing. If the two bids are equal, the two firms will split the price and costs evenly. The payoffs for each firm under each situation are shown in the matrix. A bids $14,000 A bids $6,000 Firms share the contract A wins the contract B bids $14,000 Payoff to A = $5,500 Payoff to A = $3,000 Payoff to B = $5,500 Payoff to B = $0 B wins the contract Firms share the contract B bids $6,000 Payoff to A = $0 Payoff to A = $1,500 Payoff to B = $3,000 Payoff to B = $1,500 a. Recall from the text that a Nash equilibrium is an outcome in which each player is maximizing his or her own payoff given the actions of the other players. Is there a Nash equilibrium in this game? Is there more than one Nash equilibrium? O A. There is one Nash equilibrium - for both firms to bid $6,000. O B. There are two Nash equilibria - for both firms to bid $14,000 and for both firms to bid 6,000. O C. There are two Nash equilibria - for firm A to bid $14,000 and firm B to bid $6,000 and for firm A to bid $6,000 and firm B to bid $14,000. O D. There is one Nash equilibrium - for both firms to bid $14,000. O E. There are no Nash equilibria. b. If the two firms could cooperate, what outcome would you predict in this game? O A. Firm A would bid $14,000 and firm B would bid $6,000. O B. Firm A would bid $6,000 and firm B would bid $14,000. O C. Both firms would bid $14,000. O D. Both firms would bid $6,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics

Authors: Christopher T.S. Ragan, Richard G Lipsey

14th canadian Edition

321866347, 978-0321866349

More Books

Students also viewed these Economics questions

Question

Show enthusiasm for the position (but not too much).

Answered: 1 week ago