17/10/2020 Quiz 5

Quiz 5
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There are N +1 firms, i = 0,..., N, choosing quantities qi. The inverse market demand
function is P(Q) = a – Q, where Q is total quantity produced. Each firm faces a constant
marginal cost of c and each firm’s payoff is its profit. The timing is as follows. First,
Question Firm 0 moves. Next, the remaining N firms move simultaneously, observing what 0
has done.
1
Assume that a=100, c=50 and N =24.

5. Then firm 0 will produce how many units? (enter a number only) * 4 points

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17/10/2020 Quiz 5

6. Then firm 17 will produce how many units? (enter a number only) * 2 points

7. Then firm 23 will produce how many units? (enter number only) 2 points

Consider there are 5 rational (in terms of the standard economics definition) princes
who have to share an inheritance of 100 antique coins of immense value after
their father, the king dies. The princes have a hierarchy, with prince A being
seniormost, followed by prince B and so on upto prince E. Initially, the
seniormost prince is going to propose a split of the coins. Then there is a vote
among all 5 brothers (including the proposer) on whether to accept this split. If the
number of votes in favor are higher, then the proposal goes through and the game
ends. (Assume that all princes vote and no one abstains throughout this game).
If not, then the proposer is killed by the other brothers and the next seniormost
guy takes up the mantle. He will now propose a share and similarly there will
be a vote. The same idea continues (but in case of a tie in the number of votes, the
proposal will go through because the proposer will have a casting vote). In case the
number of votes against the proposal outnumbers the number in favor, then this guy is
also killed and the 3rd seniormost takes up the mantle and the same process continues
until the game ends or when all princes are killed except the last. Use an
Question appropriate solution concept to predict the equilibrium outcome of this game.

2 Important: Please remember the following facts!! The princes make their decisions
based on 4 features/preferences.

1. They firstly want to survive.

2. Given survival they want to maximize their number of coins

3. Given both of these they prefer to kill somebody else, if all other results and
predictions would otherwise be equal.

4. Princes do not trust each other and there is no harmony among them.

The equilibrium solution is such that Prince A can propose a share such that it goes
through immediately. Find that share.

8. How many coins will prince A keep? (enter number only) * 4 points

9. How many coins will prince B get? (enter number only) * 1 point

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17/10/2020 Quiz 5

10. How many will prince C get? (enter number only) * 2 points

11. How many will prince D get? (enter number only) * 1 point

12. How many will prince E get? (enter number only) * 2 points

Consider a version of a popular game. There are two players who take turns to pick
up a stick. There are 27 sticks in all. In every attempt, a given player can pick up either
one
stick, or two sticks or three sticks. There are no other alternative choices. The one who
picks
up the 27th stick wins. After having studied sequential move games, the first mover
can apply a trick
that ensures he/she never loses.
Question
Suppose you arrange the sticks in ascending order, numbered from stick no 1 to stick
3 no 27 and players pick 1, 2 or 3 sticks serially. For example, player 1 may pick up sticks
1 and 2 and player 2 picks up sticks 3, 4 and 5, then player 1 picks up stick 6 and so
on...

The trick to win the game for sure is by playing an equilibrium strategy. The strategy
involves player 1 picking up particular sticks in every turn irrespective of the number of
sticks she picks up. Find out that optimal strategy.

13. In the first move player 1 should ensure to pick up how many sticks? 2 points
(enter number only) *

14. In the next move, irrespective of how many sticks player 2 picks up and 2 points
irrespective of how many sticks player 1 plans to pick up, to keep playing
the winning strategy player 1 should ensure to pick up which stick
number? (enter number only) *

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17/10/2020 Quiz 5

15. In the 3rd move, irrespective of how many sticks player 2 picks up and 2 points
irrespective of how many sticks player 1 plans to pick up, to keep playing
the winning strategy player 1 should ensure to pick up which stick
number? (enter number only) *

16. In the 4th move, irrespective of how many sticks player 2 picks up and 2 points
irrespective of how many sticks player 1 plans to pick up, to keep playing
the winning strategy player 1 should ensure to pick up which stick
number? (enter number only)

17. In the 5th move, irrespective of how many sticks player 2 picks up and 2 points

irrespective of how many sticks player 1 plans to pick up, to keep playing
the winning strategy player 1 should ensure to pick up which stick
number? (enter number only) *

18. In the sixth move, irrespective of how many sticks player 2 picks up and 2 points

irrespective of how many sticks player 1 plans to pick up, to keep playing
the winning strategy player 1 should ensure to pick up which stick
number? (enter number only) *

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