...$180 $(350) 7 20 $90 580 $670 $140 $(530) a. Complete the table. b. What level of output maximizes profit or minimizes loss? c. Should this firm operate or shut down in the short run? Why? 3. Suppose that Wal-World and Tarbo are independently deciding whether to implement a new bar code technology. It is less costly for their suppliers to use one system and the following payoff matrix shows the profits per year for each company resulting from the interaction of their strategies. [pic] a. Briefly explain whether Wal-World has a dominant strategy. b. Briefly explain whether Tarbo has a dominant strategy. c. Briefly explain whether there is a Nash equilibrium in this game. Directions for Submitting your Assignment Complete your assignment in this Microsoft Word® document and save it as Username-MT445Assignment-Unit#.doc (Example:TAllen-MT445Assignment-Unit5.doc). Submit your file by selecting the Unit 5: Assignment Dropbox by the end of Unit...
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...Game Theory Application on Pricing Strategies Used by the Retail Supermarket Industry Everyday low pricing (EDLP) and High-Low Pricing are the most popular pricing strategies used by companies in the retail supermarket industry. In this part of the project, the two pricing strategies are analyzed using a game-theoretic framework and compared to the observed behavior of supermarket within the industry. First, the definitions of both strategies are provided to better understand the analysis. Everyday low pricing (EDLP) is a pricing strategy that provides consumers with low prices without the need of using of coupons or waiting for sales price events. This strategy was started by Wal-Mart and Procter & Gamble and it is believed that EDLP saves retailers the time and expense of applying short-term promotional pricing, as well as, the cost of distributing and processing of coupons. Companies who often adopted this strategy also believed that it creates shopper loyalty. (Barron's Educational Series, Inc., 2000) The basic premises that suppliers are basing on when using EDLP are the following: * Steady, competitive prices will lead to even demand for products. * Inventory and other logistical costs will drop due to effective management of product flows. * There will be reduction of promotional costs and other forms of trade. * The costs of saving due to consistent demand and better management of inventory will result to lower final price of the products. (Hurwich...
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...Essentials of game theory 1. Introduction Game theory is the study of strategic decision making. More formally, it is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers."[1] An alternative term suggested "as a more descriptive name for the discipline" is interactive decision theory.[2] Game theory is mainly used in economics, political science, and psychology, as well as logic and biology. The subject first addressed zero-sum games, such that one person's gains exactly equal net losses of the other participant(s). Today, however, game theory applies to a wide range of class relations, and has developed into an umbrella term for the logical side of science, to include both human and non-humans, like computers. Classic uses include a sense of balance in numerous games, where each person has found or developed a tactic that cannot successfully better his results, given the other approach. Modern game theory began with the idea regarding the existence of mixed-strategy equilibria in two-person zero-sum games and its proof by John von Neumann. Von Neumann's original proof used Brouwer's fixed-point theorem on continuous mappings into compact convex sets, which became a standard method in game theory and mathematical economics. His paper was followed by his 1944 book Theory of Games and Economic Behavior, with Oskar Morgenstern, which considered cooperative games of several players. The second edition of this book provided...
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...Game Theory On Gallerie Apex Vs Bata Submitted to Abu Reza Mohammad Muzareba Lecturer Department of Marketing University of Dhaka Submitted by Group: Gamers Section: A Batch: 17th Department of Marketing University of Dhaka Submission date: 21th April, 2012 AbuReza Mohammad Muzareba Lecturer University of Dhaka Dept. of Marketing Subject: Letter of transmittal Dear Sir, Enclosed is a report on the Game theory Between Gallerie Apex and Bata. This report is about the internal and external business strategies of the pioneer footwear company Gallerie Apex and Bata. We were assigned to submit this report in 21th April 2012 to be submitted as a term paper for our Business Mathematics 2 course in the 3rd semester of our BBA program, from the department of Marketing of University of Dhaka. We have completed it whilst trying to meet all its broad and specific objectives within the allotted time. We are submitting the report to you only, as our course instructor and will be keeping a copy for any future references. We have organized our findings about the business strategies of the above mentioned trading companies. This paper includes an introduction to the company in focus, in terms of their business strategies and an analysis of those processes with some possible recommendations. It has been completed with a conclusion. At the end of the report...
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...The role that location plays in SRI is also embodied in Silicon Valley’s combined effect. Dozen’s of global IT giants and countless small or medium high-tech companies gather here. In addition to the economic agglomeration, cultural agglomeration and talents agglomeration, agglomeration effect also exists in the knowledge management. Through this effect, we can take full use of the dissemination and sharing of knowledge to a large extent. On top of that, Silicon Valley has become a synonym for high technology. Companies here are led by the microelectronics industry, which is the technological base of the electronic industry, and thus becoming the highest-tech technology. Every new invention here will influence the whole industry and make contributions to other projects and companies. When new products, new technique, new devices appear, we are the first to know. In other words, in such a environment, we have more resources, more specialized information, more technologies to get, and more experience and lessons to draw earlier. Finally, knowledge, technology and experience are not all that we got here. Great competition also derives from the combined effect. Competition is vital for corporations to get competitive advantage. Gathering in one place, companies of same industry have the ruler of performance evaluation through comparison, and it also bring pressure to corporations. Good performers gain honor while poor performers feel pressure and even go broke. Constant comparison...
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...Prisoner’s Dilema is a game with non-zero sum in game theory. The simplest form of the game have two gamer (called prisoner), each prisoner always wants to get the benefit for himself, no matter what the other benefit is. The result of the game is not optimal. If two prisoners cooperate with each other, the result is the best. But each prisoner naturally has a motivation to escape the prison. So that I is the reason why they call “dilemma”. Prisoner’ Dilemma focuses on researching the instant decision making when the prisoners have no time or do not expect to the cooperation or association in the future. The question is that two prisoners think rationally; this means that each prisoner chooses the most benefit option for himself no matter what the other want to cooperate or not, so they always choose the uncooperative option and this makes them have nothing. If they choose the cooperative option, both of them have benefit. pp.229 We assume the numerical result of China and Mexico when each nation produces or does not produce steel components in the table below: Japan Mexico Producing Not Producing Producing +10 +10 -10 +20 Not Producing +20 -10 -5 -5 From the table we can see that If Mexico chooses producing steel components option and Japan does not produce steel components, Japan (+20) will get more benefit than Mexico...
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...Managerial Economics and Globalization 1. Some games of strategy are cooperative. One example is deciding which side of the road to drive on. It doesn’t matter which side it is as long as everyone chooses the same side. Otherwise, everyone may get hurt. a. Does either player have a dominant strategy? Explain. There is no dominant strategy from left or right. Both right and left could result in a higher payoff. b. Is there Nash equilibrium in this game? Explain. A Nash equilibrium exists when “players are in equilibrium if a change in strategies by any one of them would lead that player to earn less than if she remained with her current strategy (Shor, 2006).” Since neither player has a dominant strategy, this game does not have a Nash equilibrium. c. Why this game is called a cooperative game? Both players have to cooperate with one another and choose the same side. It is in the best interest of both left and right to choose the same side. If not, they will have a big negative payoff. 2. a. What is the firm’s Total Revenue? MC equals MR to maximize the profits. The monopoly output level is at E. From the demand curve, the price should be at A. Total revenue equals Price times Quantity. This is represented at area of AJEO\ b. What is the Total Cost? The average output E on the graph is H. The total Cost equals ATC times Q. This equals area BHEO. c. What is the firm’s Total Profits? Total profits equal total revenue minus total cost. This...
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...Assignment 3 1. Some games of strategy are cooperative. One example is deciding which side of the road to drive on. It doesn’t matter which side it is as long as everyone chooses the same side. Otherwise, everyone may get hurt. Driver 2 Left Right Driver 1 Left 0,0 -1000 -1000 Right -1000, -1000 0,0 a. Does either player have a dominant strategy? Explain. No. There is no choice that will always have a higher payoff regardless of what the other player does. b. Is there Nash equilibrium in this game? Explain Assuming each player knows the strategies of the other, then yes, there is no benefit to changing a strategy unilaterally. c. Why this game is called a cooperative game? This game is cooperative because players can earn higher payoffs if they work together and drive on the same side of the road. 2. a. What is the firm’s Total Revenue? Produce were MR=MC, and charge price based on demand. So, total revenue is area A J E 0 (or A * E) b. What is the Total Cost? Total costs are shown by area B H E 0 (or B * E) c. What is the firm’s Total Profits? Total profits are area A J H B (or A-B * E) d. If the above monopolist were to behave like a perfectly competitive firm (operating in the long run), determine its output. In perfect competition the firm would produce...
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...Assignment 2: Planning and Playing a Game Objectives: • Learn how individuals contribute to teamwork • Experience some of the features of group work and teamwork • Understand what managers and organizational developers do to transform • groups into teams • Articulate the tangible benefits (both quantitative and qualitative) of • high-performing teams • Finish with an interest in learning more about these concepts and • techniques to apply what you learn Background: For this assignment, you will plan and play a game with your family or friends, or at work based on the idea of the classic prisoner's dilemma. If you have had a class on game theory, you will be well aware of this concept. It forms the basis of many TV game shows. The prisoner's dilemma was illustrated in Truman Capote's book, "In Cold Blood" concerning the 1959 robbery of a Kansas farmhouse by Perry Smith and Dick Hickock, who murdered their victims in order to eliminate the witnesses. After the men were captured, the police interrogated them separately. To get a confession, the police offered the men a reduced sentence for cooperating. Failure to cooperate would result in a death penalty charge for both. In the prisoner's dilemma, if both parties cooperate they are mildly punished; if one betrays another, one is severely punished while the other goes free; and if both betray one-another, both are moderately punished. Can you think of settings where you work in which the...
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...chooses the same side. Otherwise, everyone may get hurt. a. Does either player have a dominant strategy? Explain. I don’t believe that either player has a dominant strategy. Dominant strategy is “a strategy that results in the best outcome or highest payoff to a given player no matter what action or choice the other player makes” (Farnham, 2010, p. 233). If both drivers stay on their side of the road, they both pass each other safely. If one driver drives on the wrong side of the road, they both lose. If both drivers drive on the wrong side of the road, they will pass each other safely. So, in all scenarios, a given player will not have any dominant strategy. b. Is there Nash equilibrium in this game? Explain. I do believe that there is Nash equilibrium in this game. Nash equilibrium is “a set of strategies from which all players are choosing their best strategy, given the actions of the other players” (Farnham, 2010, p. 234). The driver will drive on the correct side of the road because this is their best strategy, assuming that the other driver is using their best strategy. c. Why is this game called a cooperative game? I believe that this game is a cooperative game because if one or both players don’t cooperate, then neither player wins. Cooperative oligopoly models are “interdependent oligopoly behavior that assume that firms explicitly or implicitly cooperate with each other to achieve outcomes that benefit all the firms” (Farnham, 2010, p. 490)...
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... Game Theory and Strategic Behavior The main point of the paper is the paradox between theoretically predicted equilibrium and Nash equilibrium. Results of the research state that people often act differently and there is no model of behavior. Most of actions are spontaneous and it is provoke by kind of emotion conditions such as calmness or fearless which sometimes interferes to take the correct decisions. By supporting his ideas the author of the article, introduce ten examples driven by experiments. While I am reading the article, I understand that it covers the whole material that we study in class during the whole semester – for example, it introduces some of the main point of game theory – dynamic games, several exists of games or prediction how the game will end. As we know from the course that most of games are consisted by two payers which shows us at least two treatments. In each game, we have coincided point that is called Nash equilibrium. Without reaching the point of equilibrium, we go to the second treatment where the payoff changes and there is changing in the strategy of player 1. In fact, the article shows us a famous and significant game that also called one-shot traveler’s dilemma game. The main idea of the model is that the payoffs change constantly and there is not affected on the Nash equilibrium. By each round, the strategy and behavior of people are shifting from the lower limit to the upper limit. Another game is represented...
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...Management Science Summary Definitions by Subject Game theory * Nash equilibrium * In game theory, the Nash equilibrium is a solution concept of a non-cooperative game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy. If each player has chosen a strategy and no player can benefit by changing strategies while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitute a Nash equilibrium. * Stated simply, Amy and Wili are in Nash equilibrium if Amy is making the best decision she can, taking into account Wili's decision, and Wili is making the best decision he can, taking into account Amy's decision. Likewise, a group of players are in Nash equilibrium if each one is making the best decision that he or she can, taking into account the decisions of the others. * Pareto efficiency * Pareto efficiency, or Pareto optimality, is a state of allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off. The term is named after Vilfredo Pareto (1848–1923), an Italian economist who used the concept in his studies of economic efficiency and income distribution.The concept has applications in academic fields such as economics and engineering. * Given an initial allocation of goods among...
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...Your Name 07/07/14 –Economics Unit 3 Prisoner’s Dilemma/ Part 1 1. What is a prisoner’s dilemma game? The Prisoner’s Dilemma is the best-known game of strategy in Social Science. It help us understand what governs the balance between cooperation and competition in business. 2. What is a dominant strategy? If a strictly dominant strategy exists for one player in a game, that player will play that strategy in each of the game's Nash equilibrium. If both players have a strictly dominant strategy, the game has only one unique Nash equilibrium. 3. What is a cartel? A cartel is a collection of businesses or countries that act together as a single producer and agree to influence prices for certain goods and services by controlling production and marketing. 4. What is Nash equilibrium? (In economics and game theory) a stable state of a system involving the interaction of different participants, in which no participant can gain by a unilateral change of strategy if the strategies of the others remain unchanged Part 2 – Standard Example | Clyde confesses | Clyde is silent | Bonnie confesses | Both get 10 years. | Bonnie-6 months/Clyde gets 20 years. | Bonnie is silent | Clyde gets 6 months, Bonnie is charged 20 years. | Both get a year. | 1. What is the equilibrium in this game? The equilibrium in this game would be the participation on an agreement between both of the participants, but due to a case of dishonesty, one participant can...
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...CHAPTER 13 Oligopoly and Monopolistic Competition MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question. 1) Perfect competition and monopolistic competition are similar in that both market structures include A) price-taking behavior by firms. B) a homogeneous product. C) no barriers to entry. D) very few firms. Answer: C Diff: 1 Topic: Market Structures 2) Perfect competition and monopolistic competition are similar in that firms in both types of market structure will A) act as price takers. B) produce a level of output where price equals marginal cost. C) earn zero profit in the long run. D) act as price setters. Answer: C Diff: 1 Topic: Market Structures 3) Oligopoly differs from monopolistic competition in that an oligopoly includes A) product differentiation. B) barriers to entry. C) no barriers to entry. D) downward-sloping demand curves facing the firm. Answer: B Diff: 1 Topic: Market Structures 4) Regardless of market structure, all firms A) consider the actions of rivals. B) maximize profit by setting marginal revenue equal to marginal cost. C) produce a differentiated product. D) have the ability to set price. Answer: B Diff: 1 Topic: Market Structures Figure 13.1 [pic] 5) Figure 13.1 shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy...
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...PHIL 2001: Homework 1 1. Explain the Hobbesian state of nature and why life is solitary, poor, nasty, brutish and short"? Provide a short (1-2 paragraph) critique of this view. The Hobbesian state of nature is how Hobbes believe mankind would operate without any form of government. This state of nature is incredibly tumultuous, dangerous, and volatile. In Hobbes opinion, humans are naturally prone to conflict. Hobbes also believes that humans are all created equal both intellectually and physically, which contributes to this conflict. Since they are all equal, no one possess enough power to keep them in “awe”. It is for these reasons that Hobbes believes life is “solitary, poor, nasty, brutish and short”. I disagree with Hobbes regarding his ideas that everything a man does benefits himself in some way. We can see this time and time again in human nature. A great example of this is when people donate a kidney to a loved one. They gain nothing from this, but are still more than willing to do it. This selflessness is so engrained in us, it can even be seen in our movies and TV shows. The classic scene where someone jumps in front of a bullet to save their friend has been acted out hundreds of times. Another point of contention I have with Hobbe’s view of the state of nature, is his idea that a strong ruler must exist to swiftly punish those who defect from the state. I favor Rousseau’s view that this harsh ruler is not necessary because people will not naturally want to defect...
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