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. Oligopoly Games  

1. *1.1 Show the profit matrix and explain the reasoning in the prisoners’ dilemma example where Larry and Duncan, possible criminals, will get one year in prison if neither talks, two years in jail if both talk, and if one talks that one goes free while the other gets five years. (Note: The payoffs are negative because they represent years in jail, which is a negative payoff.)

2. 1.2 Two firms compete by advertising. Given the profit matrix for this advertising game, identify each firm’s best response to its rival’s possible actions. Does either firm have ...