1.Describe how and why Oligopoly (game theory) would make one into a better manager. Also would this answer change as time goes on and have to be modified to fit the realities of the developing world. If yes or no, why?
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1. (Basic Game Theory)
Time magazine and Newsweek are considering which cover story to publish next week. Both of them have two alternatives to choose from 'impeachment' or 'Financial Crisis'. Below there are three versions of the game.
A.(Time and Newsweek are equally matched.)
This corresponds to the case when the game is symmetric. (Time and Newsweek get the same payoff when both magazines cover the same story.)
Newsweek
|
Time |
Impeachment |
Financial Crisis |
|
|
Impeachment |
45, 45 |
90, 40 |
|
|
Financial Crisis |
40, 90 |
20, 20 |
Does the game have dominant strategies for both players? If yes, describe them. Can the game be solved by dominant strategies?
Determine all Nash equilibria.
B. (Time is less popular than Newsweek.)
This version of the game corresponds to the assumption that Time is a less popular magazine (Time's payoff is less than Newsweek's when both magazines cover the same story.)
Newsweek
|
Time |
Impeachment |
Financial Crisis |
|
|
Impeachment |
30, 60 |
90, 40 |
|
|
Financial Crisis |
40, 90 |
10, 30 |
Can the game be solved by dominant strategies? If yes, describe them.
Can the game solve by the elimination of dominated strategies? If yes, describe them.
Determine all Nash equilibria
C. (Now Financial Crisis got more attention.)
This version of the game corresponds to the assumption that 'Financial Crisis' got more attention from the public. (The total number of readers for 'Financial Crisis' increased from 40 to 60.)
Newsweek
|
Time |
Impeachment |
Financial Crisis |
|
|
Impeachment |
45, 45 |
90, 60 |
|
|
Financial Crisis |
60, 90 |
30, 30 |
Can the game be solved by dominant strategies or elimination of dominated strategies?
Determine all Nash equilibria.
2. (Monopoly)
Consider a monopolist in a market. The market demand is p=150-q and the monopolist's total cost is TC=30q, with no fixed cost.
Find the monopolist's MR and MC.
Find the monopolist's optimal quantity q and price p.
Find the monopolist's profit.
Find the consumer's surplus and total social welfare.
