question archive A total of n ≥ 2 companies are considering entry into a new market
A total of n ≥ 2 companies are considering entry into a new market
Subject:EconomicsPrice:2.86 Bought3
A total of n ≥ 2 companies are considering entry into a new market. The cost of entry is 30. If only one company enters, then its gross profit is 200. If more than one company enters, then each entrant earns a gross profit of 40. The payoff to a company that enters is its gross profit minus its entry cost, while the payoff to a company that does not enter is 60.
Find a symmetric Nash equilibrium in mixed strategies
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Symmetric Nash equilibrium in mixed strategies:
10a+170(1-a)=60a+60(1-a)
10a+170-170a=60a+60-60a
10a-170a+170=60a-60a+60
-160a+170= 60
170-60= 160a
a=110/160
a=11/16
10b+ 170(1-b=60b+60(1-b)
10b+170-170b=60b+60-60b
10b-170b+170=60b-60b+60
-160b+170=60
110/160=b
b=11/1f
a=11/16 and b=11/16
Please see the attached file for the complete solution
