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Game theory is a study of situations of strategic interaction between two or more players in which there is a predefined set of rules and an outcome associated with each choice taken.

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Is it possible to have transferable utility in non-cooperative games?

Transferable utility is a concept that seems to be associated with cooperative game theory and coalitions. I would like to know if there are any examples of transferable utility in non-cooperative ...
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23 views

Query regarding best response curves

Hal Varian intermediate microeconomics ch-29(game application), page-546 to 550, subheading-games of competition. 1) in page 548, to quote the author "what about column? We can perform a similar ...
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Straffin, P. D. (1993): Game Theory and Strategy. How is the security level on p. 103 calculated?

Could somebody explain how Straffin calculated the security levels for Rose and Colin on p. 103? As far as I understood, Colin's security level is 6 because it is the minimum of the strategy Colin A ...
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59 views

Insurance question: need a brief explanation

Two risk averse people are identical in every way (including wealth, W , amount of loss, L, and utility function, U(W)) except they have different probabilities of loss. Suppose they want to buy ...
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1answer
42 views

First Price Auction with Reserve Price

I'm trying to solve the following question: "The seller wants to auction off a single item to two bidders, the valuation of each bidder is an iid draw from a uniform distribution on $[0,1]$ where ...
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0answers
53 views

Signaling questions (separating equilibrium)

Consider two firms Inverse functions: $p(q)=max\{a-q,0\} $ $q$ is total production and a is positive constant. This value of a takes two values ah=2 (high demand) and aL=1 (low demand). Their ...
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1answer
24 views

Why is every action considered to be in the support while calculating mixed strategy equilibrium?

While evaluating the mixed strategy equilibrium, in most of the cases, we consider that all actions of a player are in the support of the equilibrium.Is it always so? I was going through a problem (...
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1answer
54 views

Market Power in microeconomic theory

What does the term Market Power mean in microeconomic theory
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1answer
72 views

Discount function

Company A needs to provide service $p$ to company B. However if the company B will reserve the $(1-\alpha)$ fraction of resource for the serving customers of company A, company A will provide a ...
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3answers
52 views

Is choosing an investment by a bank only due to its regulatory capital charge a form of moral hazard?

The main shortcoming of the first Basel Accord (Basel I) was that its capital requirements did not reflect the actual risk of the bank assets. One way this nonsense influenced the asset choice of ...
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0answers
35 views

Perfect Bayesian vs sequential equilibrium

when do we use the concept of the Sequential Equilibrium and when do we use the concept of perfect Bayesian Equilibrium to solve a problem? (for example when we have a game tree like the one in the ...
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0answers
33 views

Two-sided market and bargaining game

I am solving a bargaining problem in which I have two players $player_1 $ and $ player_2 $. Both of them have a service (represented as $ z_1 ,z_2 $) that they can provide . Moreover they will ...
2
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1answer
97 views

Stackelberg setup

I am completely confused because I cannot find the leader's best response. I do not know if it is exactly the same as it was a Cournot game. What I did is: Any help will be appreciated a lot. Thank ...
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1answer
152 views

Bertrand game - Nash equilibrium

The quantity is limited to 300 but the monopoly quantity is equal to 400 and gives a monopoly price of 600. But if we plug the quantity of 300 into the demand function we get a price of 700.But I am ...
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1answer
84 views

Subgame perfect equilibrium and expected profit

I am so confused because I cannot set up the monopolist's profit maximization problem.What I did is the following one: Any help will be appreciated. Thank you.
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0answers
99 views

How can I determine if a token economic is viable?

Given a system where you incentivize people to do actions in a system, we might have good and bad actors. I would like to know if there is a software or framework where I could put the different <...
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1answer
23 views

Location game between 3 firms

I could solve Question 25 (simultaneous location game between 2 firms), but I'm confused between options b) and d) for Question 26 (sequential game involving a third firm). I have attached both ...
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1answer
171 views

Finding the optimal tax

I have a problem regarding the last two questions of this exercises because I can not understand how to set up my model in order to find the optimal tax the optimal quantity to be as there was not a ...
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0answers
34 views

How to find sequential equilibria and weak perfect bayesian equilibria quickly?

I have read several texts on the nature of sequential equilibria and weak perfect bayesian equilibria (called such by Mas-Colell, also called weak sequential equilibria). I am not looking for ...
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1answer
118 views

How are ties broken in a second price sealed bid auction?

Say there are two people who evaluate an object at 5 dollars and a third who evaluates it at 4 dollars playing a second price sealed bid auction. The first two bid 5 dollars and the third bids 4 ...
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2answers
203 views

Subgame Perfect Nash equilibrium: two stage game

Charitable organizations are ranked according to the proportion of their total budget that is spend on programs(what directly goes to the recipients of their services) relative to money spent on ...
3
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1answer
219 views

Cournot Competition game with 3 Firms

Three firms are in Cournot competition. The inverse demand curve is denoted p(q) where p is the price if a total of q units are produced. Assumptions are: p(0)>0 and p'(q)<0 and p''(q) $\le 0$ ...
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0answers
22 views

Equivalent Texts to Tirole's Game Theory

What are some books that are on par with Tirole and Fudenberg's Game Theory, excluding Myerson, Camerer, and Sinervo & Friedman? Obviously, all these books take a different perspective on game ...
2
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1answer
35 views

Repeated game with stage game has more than 1 NE

Given the game like Prisoner's dilemma (infinitely undiscounted) and each person has 3 actions in every period: confess defect and kill, and the payoff matrix have 2 NE as (D,D),(K,K). Can I still ...
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1answer
71 views

3 Firm Stackelberg's Oligopoly Game

Consider a market in which there are three firms, all producing the same good. Firm i's cost of producing qi units of the good is Ci(qi)=0 for qi≥0 for each i∈{1,2,3}; the price at which output is ...
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2answers
175 views

Finding subgame perfect equilibrium

The main part of the question is as follows (if you cannot read this, I can immediately write it) My question is how to find the subgame perfect Nash equilibrium for the both cases $\bar{g_2}\ge \...
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0answers
28 views

Game of Price Gouging (1st Degree PD)

I am currently modeling a game that shows price gouging is socially beneficial under the right conditions. The question is, I am only evaluating one good and not the classic two good case, so should ...
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1answer
121 views

Game theory - Write a maximization problem (with restriction)

I have a problem with finding a way how to solve this example: We have the company, which has two types of customers indexed as $H$ and $L$. We assume: $θ_H > θ_L$. Quantity$(Q)$ of $H$ indexed ...
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0answers
27 views

Help with a computational method in solving expected payoffs for really large Bayesian game

Im looking for some advice on I can solve my game below computationally because by hand it would take forever. $(1)$ $(2)$ $(3)$ $(4)$ $(1)$ is combination of type $[a,c]$ $(2)$ is combination ...
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1answer
112 views

Question on oligopoly.

Consider an oligopoly between two identical firms producing a homogenous good with constant marginal cost where firms face linear market demand. $B_i(q_j)$ denotes firm i’s best response given the ...
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1answer
89 views

Cournot equilibrium question

There are two firs in the market. They produce perfect substitutes at cost $c(y_i)=y_i/3$ for i=1,2. The demand function is $p=1-(y_1+y_2)$ Consider the Cournot competition where firms ...
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1answer
58 views

Auction question

I’m studying on auction. But I couldn’t understand some questions about this topic. And I cannot solve such type questions. For example, I know that a set of symmetric and risk neutral bidders ...
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1answer
54 views

Finding Bertrand equilibrium with no demand function explicitly given

Two cell phone companies A and V are located at the extremes of a line of length one and transportation cost t = 4. Consider an initial situation where both firms offer a generic phone that consumers ...
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1answer
127 views

Mixed Nash equilibrium

I have game table posted below: $$\begin{matrix} &\#2 \\ \#1 & \begin{array}{c|c|c|c} &D &E &F \\ \hline A &4,4 &6,6 &2,6 \\ \hline B &6,4 &2,2 &0,4 \\ \...
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1answer
160 views

Question on subgame perfect equilibrium

Consider a world of complete information with two agents X and Y and two time periods 1 and 2. Person X only lives in second period. Person Y lives in 1st and 2nd periods both. X and Y are each ...
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2answers
63 views

Proper definition of extensive form game

Consider the following game: Let $N := \{1,2,3,4\}$ denote a set of agents. Going from 1 to 4 each agent can decide how many of the remaining agents he wants to integrate into a coalition. The ...
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0answers
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SPNE when discount factor is 1

I have an infinite Centipide game with discount factor = 1. When discount factor is 1, 1-shot deviation doesn't imply SPNE. How do I then: prove whether S,S,S.. strategy in the game below is or isn't ...
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2answers
153 views

How to calculate Pareto Optimal outcome in a game with a Nash Equilibrium

I have at hand a two period game. In period 1, Union decides wage offer $w$. In period 2, firm decides on L, given wage. Union maximizes $wL$ Firm maximizes $=(L(100-L) - wL) \quad if \quad L&...
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1answer
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How to write budget constraint if the agent sell the goods that buy

Della’s utility is $U(G,R)$ G is the consumption of gasoline per week R is the the consumption of other goods Just help me to write down budget constraint. I think that $$R*1+(G-20)*10+20*1=...
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41 views

Nash equilibrium for Bertrand Model with Spatial Differentiation

Consider a town with consumers represented by a closed interval $[0,2]$ with the consumers spread continuously and uniformly. There are two stores, $A$ and $B$ who sell the same product at $p_A$ and $...
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Moral hazard problem with risk neutral agent and unobservable action

Q.3. A salesman's probability of selling an encyclopedia is p 2 (0; 1) if he exerts e ort, and 1/2 otherwise. His cost of exerting e ort is 20, and his reservation utility is u = 50. A sale generates ...
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1answer
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Original Work for Pareto Refinement of NE under Strategic Form

Just looking to see if anyone has any knowledge of original work for pareto refinement of NE under strategic form. I want to give credit to the refinement in a paper I am writing. I pulled the ...
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0answers
53 views

applying envelope theorem to the first order condition

$\max u(c,s)$ subject to $y=c+P(s)$ is equal to $u(\bar{c}(y;P),\bar{s}(y;P))=v(y;P)$. Then, the first order condtion of $v(y;P)$ is $u_c(\bar{c}(y;P),\bar{s}(y;P))$, using the envelope condition....
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0answers
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Existence of nash equilibria in finite games

I was going through the proof of existence of a Nash Equilibria in finite normal form games (Proof via Brouwer’s theorem) and got a question regarding the requirement of finiteness for the number of ...
5
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1answer
286 views

Example of a game with no Nash equilibria but at least one correlated equilibrium

In this answer there is the offhand remark Of course, a game with no Nash equilibria may have a correlated equilibrium, but I'm not aware of any simple examples where this is the case. Can ...
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2answers
112 views

Correlated Equilibrium for Rock Paper Scissors

Consider the game of Rock, Paper, Scissors (RPS), with payoffs given as follows: Is there a correlated equilibrium in this game? Consider, for example the signal given to both players not to play ...
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1answer
55 views

Mixed strategy Nash equilibrium in 3x3 game

What is the MSNE for the following game? I think you can eliminate strategies $A$ for player 1 and $C$ for player $2$, as these will are weakly dominated by all other strategies. Then, the game ...
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2answers
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In auction theory, why is my own valuation a random variable?

Auction theory typically (always?) begins by assuming that each bidder's valuation is a random variable. Now, it might seem reasonable (at least from a Bayesian perspective) for you to treat other ...
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50 views

Game of Imperfect Informatiom

I have a game that I am trying to solve for here: My question is, due to the information set, can the game be solved with sub-perfect refinement?
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1answer
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Auction with “buy-it-now” option

Consider the buy-it-now price often included in online auctions. Suppose that 2 bidders in an ascending oral (English) auction bid for an object. Each has values i.i.d uniformly on $[0,1]$. Suppose ...