Concepts: Game Theory, Dominant Strategy, Nash Equilibrium
Background: The season’s penultimate game is critical for the Cuervos to qualify for the playoffs. The Cuervos must win this game, but Toluca’s team must also win its game for the Cuervos to qualify. Based on the description made in the series, if the Cuervos make a significant effort, they will win their game. The same is true for Toluca. Therefore, we can consider winning or losing their games as strategies for both Toluca and Cuervos. Toluca will be advantaged if the Cuervos do not qualify, as it is a good team. Also, if they lose their game, Toluca would be guaranteed to play an easier contestant in the first round of the playoff.
Question: Determine whether both teams have dominant strategies and predict the result of Tijuana’s and the Cuervos’ games using the following payoff matrix that represents this situation.
Concepts: Opportunity cost of time, best response strategy
Background: Eniola is campaigning to convince people to vote for her. However, as she is not the only candidate, other aspirants and their teams could potentially react to reduce Eniola’s campaign’s efforts.
Question: What could be some strategies Eniola’s competitors could implement in this situation? Can the strategies be applied at the same time? How could they select the appropriate strategy(ies)?
Background: Both Eniola and Jumoke have information that could negatively affect the other. Though it seems clear that if only one discloses the information about the other, she would enormously benefit.
Question: How do economists typically represent this situation? What does game theory predict in such a situation? Should none of them, one, or both reveal information?
Background: In this clip, the Colombian government cooperates with the DEA to capture Pablo Escobar and dismantle the Medellin cartel. Both governments plan to sign an extradition treaty, allowing drug lords to be prosecuted under American law. Threatened by the extradition, Pablo Escobar decides to attack the Colombian Palace of Justice.
Question: Create a payoff matrix, modeled on a Hawk-Dove game, to depict the Colombian government and the Medellin cartel’s strategies. What is each player’s dominant strategy? What is the Nash equilibrium of the game?
Categories: Microeconomics, industrial organization, game theory
Concepts: Cartel, monopoly.
Background: After one gang violated another territory, the two gangs discussed their exclusive territory and agreed not to deal drugs on each other territory.
Question 1: Why do gangs want the exclusive right to sell in a defined territory, and why is it so complicated for them to stick to their agreement?
Question 2: Create a payoff matrix to explain why it is potentially profitable for gangs to form a cartel and why, if they do, they also have an incentive to break the cartel.
