Nike and Reebok (athletic shoe companies) are considering whether to advertise during the Super Bowl. Devise a simple prisoners' dilemma game to demonstrate the strategic considerations that are relevant to this decision. Does the repeated game scenario
differ from a single period game? Is it possible that a repeated game (without collusive agreements) could lead to an outcome that is better than a single-period game? Explain the circumstances in which this may be true.
The answer should show that if both shoe companies decide to advertise they will both be worse off than if they did not. It should also show that each company has the individual incentive to advertise. The dominant strategy of both companies will be to advertise, regardless of what the other is doing. If the game is repeated more than once it is possible that the shoe companies will decide not to advertise in the hopes that the other company adequately understands the mutually beneficial gains that come from not advertising.
You might also like to view...
Hedge funds often buy the same stocks and track each other's investment strategies. This is an example of ________
A) herding B) anchoring C) hedging D) sniping
Economic growth as it is currently measured
A. does not account for how increased per capita income is distributed across income groups. B. understates actual economic growth since it does not adjust for changes in leisure. C. does not consider? spiritual, cultural or social difficulties that may arise from growth. D. All of the above.
Suppose that a new government is elected in Eurnesia. The new government takes steps toward improving the court system and reducing government corruption. The citizens of Eurnesia find these efforts credible and outsiders believe these changes will be effective and long lasting. These changes will probably
a. raise real GDP per person and productivity in Eurnesia. b. raise real GDP per person but not productivity in Eurnesia. c. raise productivity but not real GDP per person in Eurnesia. d. raise neither productivity nor real GDP per person in Eurnesia.
A bus is mostly filled with passengers and ready to travel from Los Angeles to San Francisco. At the last minute, a person comes running up to the bus and takes a seat. The change in the bus company's total cost as a result of transporting one more passenger on this trip is called:
A. marginal cost. B. average total cost. C. variable cost. D. fixed cost.