Big Pig and Little Pig Have Two Possible Strategies, Press

question 9

Multiple Choice

Big Pig and Little Pig have two possible strategies, Press the Button, and Wait at the Trough.If both pigs choose Wait at the Trough, both get 3.If both pigs choose Press the Button, then Big Pig gets 8 and Little Pig gets 2.If Little Pig presses the button and Big Pig waits at the trough, then Big Pig gets 10 and Little Pig gets 0.Finally, if Big Pig presses the button and Little Pig waits at the trough, then Big Pig gets 2 and Little Pig gets 1.In Nash equilibrium,

• A)Little Pig will get a payoff of 1 and Big Pig will get a payoff of 2.
• B)Little Pig will get a payoff of 2 and Big Pig will get a payoff of 8.
• C)both pigs will wait at the trough.
• D)Little pig will get a payoff of zero.
• E)the pigs must be using mixed strategies.

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Definitions:

Oligopoly

A market structure characterized by a small number of firms controlling the majority of market share, leading to limited competition.

Difficult

Requiring considerable effort or skill to accomplish, deal with, or understand.

Interdependence

The mutual reliance between two or more groups, organizations, or countries, where the actions of one affect the wellbeing of the others.

Oligopolistic Industry

An Oligopolistic Industry is a market structure characterized by a small number of firms that dominate the market, leading to limited competition.