See attachment for some of homework questions Document Preview: 1. Using a prisoner’s dilemma game such as the “wedding game.” explain how a positional arms race can occur. In your answer be sure to...

1. Using a prisoner’s dilemma game such as the “wedding game.” explain how a positional arms race can occur. In your answer be sure to explain positional arms races, the nature of the wedding game, etc.
I could not find wedding game, but will write on arms race.
PD is a game that shows that independently the Nash equili
ium is sub optimal for individuals and society. Cooperation could have led to better and optimal results.
Consider country 1 and 2 that decide or whether to build nuclear capacity or not. The payoffs are shown below:
country 2
    
    NOT BUILD
    BUILD
    NOT BUILD
    3,3
    1,4
    BUILD
    4,1
    2,2
country1
Social optimality calls for maximum sum of gains= 3+3= 6 when both do not build. However without cooperation BUILD is dominant strategy as payoffs are higher with build i
espective of what other nation does.
5. Joe is the owner of the 7-11 Mini Mart, Sam is the owner of the Super America Mini Mart and together they are the only gas stations in town. At the cu
ent price of $3 per gallon both receive total revenues of $1,000. Joe is considering cutting his price to $2.90, which would increase his total revenue to $1,350 if Sam continues to charge $3. If Sam's price remains $3 after Joe cuts his price, Sam will collect $500 in revenues. If Sam cuts his price to $2.90, his total revenues would also rise to $1,350 if Joe continues to charge $3. Joe will collect $500 in revenues if he keeps his price at $3 while Sam lowers his to$2.90. Joe and Sam will receive $900 each in total revenue if they both lower their price to $2.90. You may find it easier to answer the following questions if you fill in the payoff matrix below.
  SHAPE \* MERGEFORMAT
 
 a) Fill out the payoff matrix
JOE
    
    CUT P
    CURRENT P
    CUT P
    900,900
    1350,500
    OLD P
    500,1350
    1000,1000
SAM
) To Sam, cutting his price to $2.90 is a 
A. revenue maximizing strategy.
B. dominant strategy.
C. dominated strategy.
D. profit maximizing strategy
c) The clear outcome of this game is that 
A. Joe will cut his price and Sam won't.
B. both will cut price to $2.90.
C. Sam will cut his price and Joe won't.
D. neither Joe nor Sam will cut their price.
d) To both Joe and Sam, __________ is a __________. 
A. cutting price to $2.90; disequili
ium.
B. leaving price at $3; Nash equili
ium.
C. leaving price at $3; dominant strategy.
D. cutting price to $2.90; Nash equili
ium.
3. In the “Drilling for Water” game, the final result is the lowering of the water table. Explain how the lack of property rights influences this outcome.
Please provide details of this game from text book.
4. You own an apple orchard and raise and sell apples at your own fruit stand. The neighbor next door to your orchard is a beekeeper. She keeps bees to make and sell honey. This year, the neighbor is considering getting rid of her bees because her honey business loses money. If she doesn't raise her bees, your apple production will fall without the bees to pollinate the trees. The following payoff matrix shows the returns to you and your neighbor with and without the bees.
No Bees
Bees
You

$1000
$1300
Neighbo

0
-$100
a. If your neighbor makes her decision without considering your orchard, will she keep the bees? Why or why not?
NO, She gets -100 with bees compared to 0 without them. So NOT keeping is optimal for he
. Is it socially optimal for your neighbor to keep the bees? Explain.
YES total gain with bees = 1300-100=1200
total gain without bees = 1000 +0=1000
c. If your neighbor consults with you, will she decide to keep the bees? What would you suggest to your neighbor if she consults you?
You gain +300 with bees , so you can offer het upto 300 to keep the bees. suppose she agrees to take 200 . This way she gets -100 +200 =100 with bees ( compared to 0 without them) and you get 1300-200 =1100> 1000. Both are better off
d. 5. You are at the company convention and your CEO gives a rousing motivational speech about how the company wants its employees to become leaders.
The CEO suggests that short-term thinking is important and urgent, whereas long-term thinking is important but not so urgent. The CEO, however, suggests that leaders engage in long-term thinking and offers the following payoffs for you: If you are involved in important and urgent work (short term thinking), the payoff is $300. If you are involved in important but not urgent work (long term thinking), the payoff for you is $500.
When you go back to the home office, however, you realize that the company culture is such that if you do long term thinking, you look like you are slacking off as long as there are other managers who are doing the urgent short term work. And so there is a loss of social standing for you worth $250. On the other hand, if you do short term work while the...