Topic: Economics for Business Decisions – Strategic Games & Bargaining

Description

Answer these questions (two separate paragraphs) by reading Chapters 15 & 16 of Ebook Managerial Economics by Froeb, McCann, Ward, Shor (user id and password will be sent separately

A. Mr. and Mrs. Jenkins typically vote oppositely in elections and so their votes “cancel each other out.”

They each gain two units of utility from a vote for their positions (and lose two units of utility from a vote against their positions). However, the bother of actually voting costs each one unit of utility.

*Diagram a game where they choose whether to vote, or not to vote.

B. Suppose Mr. and Mrs. Jenkins agreed to vote in tomorrow’s election.

*Would such an agreement improve utility?

*Would such an agreement be an equilibrium?