14.2. (2 marks) Ignoring mixed strategies, does the following game have a Nash
equilibrium? Does it have more than one Nash equilibrium? If so, what are they?
Player 2
West
East
North 2.1 1000, 900
Player 1
South
3,2
2.1
14.6. Let us ignore mixed strategies. Asahi and Kirin are the two largest sellers of beer in
Japan. These two firms compete head to head in the dry beer category in Japan. The
following table shows the profit (in millions of yen) that each firm earns when it charges
different prices for its beer:
Kirin
X630
660
X690
720
¥630
180, 180 184, 178 185, 175 186, 173
Asahi
660
178, 184 183, 183 192, 182 194, 180
X690
175, 185 182, 192 191, 191 198, 190
720
173, 186 180, 194 190, 198 196, 196
a) (1 mark) Does Asahi have a dominant strategy? Does Kirin?
b) (2 marks) Both Asahi and Kirin have a dominated strategy: Find and identify it.
c) (2 marks) Assume that Asahi and Kirin will not play the dominated strategy you
identified in part (b) (i.e., cross out the dominated strategy for each firm in the table).
Having eliminated the dominated strategy, show that Asahi and Kirin now have another
dominated strategy.
d) (2 marks) Assume that Asahi and Kirin will not play the dominated strategy you
identified in parts (b) and (c). Having eliminated this dominated strategy, determine
whether Asahi and Kirin now have a dominant strategy.
e) (1 mark) What is the Nash equilibrium in this game?
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