Payoff Matrix Firm B Low Price High Price Low Price 10 5 10 25 High Price 25 16)

Question

Payoff Matrix Firm B Low Price High Price Low Price 10 5 10 25 High Price 25 16) In the above figure, the Nash prodt ib ms price high tgae to the A) 400. B) 20 i hisserves tothe right, and 40% of his serves atbebody af hisapptetu B) a domiant statE D) dehemic sey C) mixed strategy 18) One aspect of prospect theory is that people tendto A) love losses more than gains. C) be very risk averse to losses. bevery risk ave se tolrF - D) hate gains megniles of potential 19) In the following game, how many Nashquibia an there Firm B Do Not Enter Enter 100 Enter 50 50 Do Not Enter 0 A) 0 C)2 B)1 D) Unable to determine D) 100 20) The variance for the outcomes in the previous question is C) 130 B) 0 A) 18,100 B-3

Explanation / Answer

16) Profit when high, high is selected, is 20 to each firm so Nash product is 20 x 20 = 400. Option A is correct.

17) This selection is called randomizing in Game theory when players select strategies with assigned probabilities. Option C is correct

18) Option C is correct. Prospect theory considers that people are risk-averse for losses

19) Option C. No player has dominant strategy. Selecting the chosen strategies will result in two Nash equilibria, (0, 50) and (50, 0)

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