managerial ecomomics

Please make sure scholarly sources are used and properly cited. Please include work and reference page. I will also upload and word document assignment with question along with podcast for assignment. If there are any questions please feel free to submit them.

In each of the following three payoff tables, Lowe’s and Home Depot must make simultaneous decision to either cooperate or not cooperate with each other. Explain why or why not each situation represents a prisoners’ dilemma. You will need at least 50 words for each question.

1.

Home Depot

Don’t Cooperate

Cooperate

Don’t Coop.

100

100

300

200

Lowe’s

Cooperate

200

300

500

500

2.

Home Depot

Don’t Cooperate

Cooperate

Don’t Coop.

200

200

600

150

Lowe’s

Cooperate

150

600

500

500

3.

Home Depot

Don’t Cooperate

Cooperate

Don’t Coop.

50

50

600

25

Lowe’s

Cooperate

100

200

300

300

The Tampa Tribune and the St. Petersburg Times compete for readers in the Tampa Bay market for newspapers. Recently, both newspapers considered changing the prices they charge for their Sunday editions. Suppose they considered the following payoff table for making a simultaneous decision to charge either a low price of $0.50 or a high price of $1.00. Tampa’s profits are shown in bold. St. Petersburg’s profits are in regular type.

St. Petersburg Times

Low Price

High Price

A.

B.

Low price

$100,000

$120,000

Tampa

$100,000

$120,000

Tribune

C.

D.

High Price

$88,000

$98,000

$54,000

$90,000

For questions 4 – 5, use the suggested words in parentheses after each blank to answer the questions. You can answer questions 6 and 7 directly. Provide a short explanation (about 50 words) to defend each answer for questions 4-7.

4.

Tampa Tribune’s dominant strategy is ____________ (low price, high price, it has no dominant strategy).

St. Petersburg Times’ dominant strategy is ____________ (low price, high price, it has no dominant strategy).

5.

This newspaper pricing decision ________ (is, is not) a Prisoners’ Dilemma.

6.

Is there a Nash Equilibrium in this game? If so, which cell(s) is/are the Nash? Is/are the Nash Dominant Strategy Equilibrium?

7.

Which cell(s) is/are strategically stable?

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