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Chapter 15: Strategic Games
15-1 To Vote or Not To Vote
Mr. and Mrs. Ward 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 position (and lose two units of utility from a vote against their position). However, the bother of actually voting costs each one unit of utility. Diagram a game in which they choose whether to vote or not to vote.
15-2 To Vote or Not To Vote, Part 2
Suppose Mr. and Mrs. Ward agreed not to vote in tomorrow’s election. Would such an agreement improve utility? Would such an agreement be an equilibrium?
15-6 Entry Game With Withdrawal
In the text, we considered a sequential move game in which an entrant was considering entering an industry in competition with an incumbent firm (Figure 15-1). Consider now that the entrant, if fought, has the possibility of withdrawing from the industry (at a loss of one for the entrant and a gain of eight for the incumbent) or staying (at a loss of five for each player). What is the equilibrium of this game? Discuss whether the entrant is better off with or without the ability to withdraw.
Chapter 16: Bargaining
16-3 House Closing
You’ve entered into a contract to purchase a new house and the closing is scheduled for next week. It’s typical for some last-minute bargaining to occur at the closing table, where sellers often try to tack on extra fees. You have three options for the closing: (1) attend yourself, (2) send an attorney authorized to close only per the previously negotiated terms, or (3) presign all the closing documents per the current terms and don’t attend the closing. Which of these would be most advantageous from a bargaining position?
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