1. Which of the following statements are true?
(There can be more than 1 correct answer)
2. Assume that two big communication companies (Secchat and Safetalk) are thinking about developing an innovative chat system for smartphones. Both companies can either develop the new technology or not. Given the dynamics and characteristics of the market, there is only room for one new chat system.
The payoffs would look like this:
How many Nash Equilibria are in this one periodic game?
3. Your business intelligence department realizes that they made a mistake in calculating the expected payoffs. Instead, they expect payoffs as shown in the game matrix below. They are not sure about what payoffs Pepsi and Cola can receive if they both do not advertise.
What payoffs would they have to receive in order to turn this game into a prisoners’ dilemma?
4. How many dominated strategies are in this game?
5. Pepsi and Cola consider starting an advertising campaign. Both can either advertise or not advertise. If both decide to advertise each company gets a payoff of 50 mn Euro. If they don’t advertise, each gets a payoff of 70 mn Euro. If Cola advertises and Pepsi doesn’t, Cola gets a payoff of 100 mn Euro, whilst Pepsi makes losses of 50 mn Euros – and vice versa.
If you were responsible for marketing at Coca Cola, would you launch the advertising campaign?
(Consider this as a single stage game, in which all players act rationally.)
1.Under which circumstances would Adam’s Pizza decide against a marketing campaign?
2. A well-known cinema in town has offered Adam’s Pizza (A) to make advertisement on their tickets. If Adam’s Pizza declines the offer, they will approach A’s competitor Big Pizza (B) with the same offer. On the tickets, there is only space for one advertisement campaign. The actions and the corresponding payoffs are shown in the game tree below.
What is the Nash Equilibrium in this game?
3. Which of the following statements are correct?
4. Let’s get back to the 1970’s: At this time, Intel is the only supplier of computer chips to IBM. At the same time, IBM is exploring the possibility of decreasing this dependency and producing computer chips on its own. In order to prevent IBM from doing so, Intel promises to decrease its price.
IBM can choose first between continuing to purchase computer chips from Intel and producing them in an own subsidiary. After that, Intel can choose whether to set a low price or a high price. If IBM opens its own subsidiary, IBM receives 40mn USD and Intel gets a payoff of 30mn USD. If IBM keeps Intel as its supplier and Intel sets a high price, then IBM gets a payoff of 10mn USD and Intel makes 90mn USD. In the case of low prices, IBM and Intel receive 50mn USD each.
Imagine you are the purchasing director of IBM. Would you open your own subsidiary producing computer chips?
5. Imagine now that Intel invests in a new production facility that increases its production capacity significantly. In order to utilize their capacity, Intel has to sell high quantities to set low prices. With charging high prices, Intel would now realize a payoff of 30mn USD (given that IBM doesn’t open an own subsidiary).
As the purchasing director of IBM, would you now open your own subsidiary for computer chips?
1.Can a Nash Equilibrium contain dominated strategies?
2. Should Mars opt for the product placement in this game?
3. Can a game contain several Nash Equilibria?
4. You are the owner of the hair salon City Cuts.
Which price strategy would you choose given the payoffs in the matrix below? (You want to end up in a Nash Equilibrium.)
5. Simultaneous games can be solved with the help of a ______.
6. How many Nash Equilibria exist in this game? Please note that we only consider equilibria in pure strategies as discussed in the course.
7.Which values can be plugged in for x so that the game turns into a
8. What is a strategy according to the working definition of this course?
9. British Airways is the monopolist for domestic flights in the United Kingdom. Lufthansa wants to enter the market. British Airways threatens Lufthansa to start a price war if they enter.
Is this a credible threat ?
10. Identify the dominated strategy in the following game: