Managerial Economics and Strategy, 2/e

Questions

All exercises are available on MyEconLab; $\ast =answer$ [&\*|=|answer&] at the back of this book; $=use$ C[&~bf~|=|~normal~use~norm~&] of calculus may be necessary.

1. Repeated Games  

1. *1.1 Two firms are planning to sell 10 or 20 units of their goods and face the following profit matrix:

   

   1. What is the Nash equilibrium if both firms make their decisions simultaneously? (Hint: See Chapter 12 .) What strategy does each firm use?

   2. Draw the game tree if Firm 1 can decide first. What is the outcome? Why?

   3. Draw the game tree if Firm 2 can decide first. What is the outcome? Why?

2. *1.2 In the repeated-game airline example illustrated in Table ...