Question

In: Economics

Define the term Nash equilibrium. In general, what can be claimed about the existence, uniqueness, and...

Define the term Nash equilibrium. In general, what can be claimed about the existence, uniqueness, and Pareto optimality of Nash equilibria? Support your answers with an appropriate illustration. (graph)

Solutions

Expert Solution

Nash Equilibrium

Players do not gain anything by changing their strategy unilaterally.

Every person plays a pure strategy - Pure strategy Nash Equilibrium. Each player plays only one action with probability 1.

  • Existence
  • Uniqueness

Unique, non-symmetric pure Nash Equilibrium - rent-seeking games

Assumptions - production function of agents for lotteries are concave, strictly increasing, and, twice differentiable. Exact solutions can be obtained for numerous examples.

  • Pareto optimality - It is a notion of efficiency. It is not possible to make a player better off by hurting another player.

Pareto-optimal


Related Solutions

What can you say, in general, about the Cournot-Nash equilibrium quantities and prices as the number...
What can you say, in general, about the Cournot-Nash equilibrium quantities and prices as the number of sellers (n) competing in the industry rises? Now, think of two firms colluding to earn monopoly profits by each agreeing to enjoy half the market share. (i)If each firm honors this agreement, calculate each firm’s level of output and the resulting profit enjoyed by each firm. (ii)In general, when can such an arrangement be feasible, that is, when will each firm have an...
Define Nash Equilibrium and how it can be applied
Define Nash Equilibrium and how it can be applied
What is/are the Nash Equilibrium(s) in this game?
Consider the following matrixFirm AFirm BLow PriceHigh PriceLow Price5, 56, 3High Price3, 67, 7What is/are the Nash Equilibrium(s) in this game?Group of answer choices(5,5) only.(7,7) only.both (5,5) and (7,7).There are no Nash equilibriums in this game.
Define a Nash equilibrium intuitively-a mathematical definition is not expected. Why is it always a conditional...
Define a Nash equilibrium intuitively-a mathematical definition is not expected. Why is it always a conditional equilibrium? (10)
write an essay about Game Theory, types of games and the Nash Equilibrium?
write an essay about Game Theory, types of games and the Nash Equilibrium?
Can we say that If a game has a unique nash equilibrium, it is also a...
Can we say that If a game has a unique nash equilibrium, it is also a dominant strategy equilibrium. How can we prove this statement? This is just a statement. we should find whether it is true or not by making proof.
What does it mean to define a new product or uniqueness of a product from an...
What does it mean to define a new product or uniqueness of a product from an entrepreneurs perspective . Briefly explain the 5 major stages of product development Support your answer with examples.
I. Match the term with the definition A. Long-run        B. Nash equilibrium          C. Oligopoly    D....
I. Match the term with the definition A. Long-run        B. Nash equilibrium          C. Oligopoly    D. Price discrimination        E. Utility              F. Monopolistic competition      G. Dominant strategy    H. Opportunity cost        I. Diminishing Marginal Product                J. Externality ______________ is a measure of consumer satisfaction. The market structure where many firms produce differentiated products is called _________________ In a game, if a player wants to play a certain strategy regardless of what the opponent does, we call this strategy the ______________ With fixed...
The existence of externalities can lead to inoptimal equilibrium if the markets are left to themselves....
The existence of externalities can lead to inoptimal equilibrium if the markets are left to themselves. Based on your understanding of externalities, first, explain negative and positive externalities. How can the government intervene in order to assure a socially optimal equilibrium? Remember to contextualize, define, exemplify, and illustrate relevant concepts.
Can a player play a weakly dominated action at a Nash equilibrium? If yes, give an...
Can a player play a weakly dominated action at a Nash equilibrium? If yes, give an example. If no, explain why.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT