d) What does the sequential move game look like for the two firms, where Pepsi moves...

d) What does the sequential move game look like for the two firms, where Pepsi moves first, what is the equilibrium and why?

Solutions

Expert Solution

Ans.

- Sequential move games expect players to consider the future outcomes of their present move before picking their present activity. Examination of sequential move games for the most part requires the production of a game tree. In reverse acceptance is a strategy by which we can discover the equilibrium of such games.

- The leader firm chooses its output first and then the follower firm chooses after observing the leader’s output. It can be shown that the leader firm has a distinct advantage, being a first mover.

- The leader can aggressively overproduce to force the follower to scale back its production or even punish or eliminate the weaker opponent.

- The leader earns more while the follower earns less

- The important conclusion is that the optimal strategy of the firm depends on what its adversary does. The price and marginal revenue the firm receives for its product depend on both its decisions and its adversary’s decisions.

Rahul Sunny answered 2 years ago

Next > < Previous

Related Solutions

A sequential game with two-players 1 and 2, where player 1 has the first move advantage....

A sequential game with two-players 1 and 2, where player 1 has the first move advantage. Each player has two strategies, A and B. If both players choose A, each gets a payoff of 2. Both choose B, each gets a payoff of 3. For player 1 choose A and player 2 choose B, player 1 gets 4, and player 2 gets 1. If player 1 chooses B and player 2 choose A, player 1 gets a payoff of 1,...

This question is about the sequential moves Stag Hunt game. There are two players. Player 1...

This question is about the sequential moves Stag Hunt game. There are two players. Player 1 moves first, player 2 observes player 1’s move, and then player 2 moves. Players get 10 jollies each if they both choose Stag; 5 jollies if they choose Hare; and 0 jollies if they choose Stag but the other player does not. What is the set of (pure) strategies for player 1? What is the set of (pure) strategies for player 2? Explain why...

What does equilibrium look like at a concert or a football game? Explain why

Two games that differ only in the timing of moves—one simultaneous, the other sequential move—can sometimes...

Two games that differ only in the timing of moves—one simultaneous, the other sequential move—can sometimes have completely different subgame-perfect equilibria. Why? A. A simultaneous game has only one subgame while a sequential game has several. B. The second mover cannot choose non-credible threats in the SPE of a sequential game. C. A NE can never be also an SPE. D. None of the other answers provided is correct. E. The question does not make sense. Subgame-perfect equilibrium cannot be applied...

This is a sequential game with two players A and B. In this game a dime...

This is a sequential game with two players A and B. In this game a dime is put on the table. A can take it or pass. If A takes a dime, the game ends; if A passes, then B can take 2 dimes or pass; if B takes 2 dimes, the game ends; if B passes, then A can take 3 dimes or pass; and so on until a choice of a dollar. This process is shown in the...

Four firms (A, B, C, and D) play a simultaneous-move pricing game. Each firm (i) may...

Four firms (A, B, C, and D) play a simultaneous-move pricing game. Each firm (i) may choose any price Pi ∈ [0, ∞) with the goal of maximizing its own profit. (Firms do not care directly about their own quantity or others’ profits.) Firms A and B have MC = 10, while firms C and D have MC = 20. The firms serve a market with the demand curve Q = 100 – P. All firms produce exactly the same...

what does a 6f orbital look like?

what does the future of HIPAA look like

What does the Future of TelaDoc look like?

What do the graphs of kinetic energy and potential energy look like as the mass moves?...

What do the graphs of kinetic energy and potential energy look like as the mass moves? What do the graphs of position, velocity, and acceleration look like? What is damping and how does it affect this system? What’s the difference if the mass on a spring is horizontal instead of vertical? What is resonance and when does it occur?

Subjects