How game theory can be used to model oligopolistic markets

 

 

 

 

Question 1:
Suppose that graduating from a university only serves as a signal of high ability (and
is not useful in any other way) and that only high-ability individuals can graduate from
university. The costs of a university education are denoted by c. Furthermore, the
productivity of low-ability workers is £20,000 while the productivity of high-ability
workers is £80,000. Firms pay wages according to the (expected) productivity of their
workers. The share of high-ability individuals among the population is θ, the share of
low ability individuals is 1 − θ.
a) What is the difference between a pooling equilibrium and a separating equilibrium?
(10 marks)
b) Under which conditions does
(i) a separating equilibrium exist, and
(ii) a pooling equilibrium exist?
Explain the conditions carefully. What are the wages in these equilibria? (60 marks)
c) Specify the parameters c and θ such that (i) a separating equilibrium exists and (ii)
high-ability individuals are better-off in this separating equilibrium than in a
hypothetical situation in which there is no university. (30 marks)
Question 2:
Explain how game theory can be used to model oligopolistic markets, illustrating your
argument with a game that takes the form of a prisoner’s dilemma. (100 marks)
Word limit: 3000 words in total. Please provide a word count at the end of each
question as well as an overall word count at the end of your essay.
Word limit includes any text in the essay (e.g. quotations, in-text references, and
footnotes). Word limit excludes title of the question/ essay, equations, tables and their
headings, diagrams and their headings, appendices, and bibliography.
Note on the use of Appendices:

 

Sample Solution

 

 

 

Human Communication

For a long time, people have taken different specialized strategies whether or not they are communicating in, non-verbal communication or gesture based communication. In any case, how does this correspondence influence us as a person? There are different sorts of correspondence, for example, relational correspondence, interior correspondence, multifaceted correspondence. Seeing how individuals speak with individuals is a significant component in our lives and we have to see how we can speak with ourselves and others.

Human correspondence examination can be confused, however it is additionally appealing. The procedure of human correspondence is a fascinating subject with regards to numerous regions. Since individuals need to speak with other language abilities, relational correspondence is some of the time troublesome. As Givenns expressed, “Our intricacy is seen using phonetic and nonverbal correspondence in our day by day lives and the capacity to communicate with people at numerous levels profoundly and sincerely I will. Humankind is a social creature and must have a place with the network. There are some fundamental and important data on human correspondence important to comprehend this undertaking. Above all, “Correspondence with individuals is to make and offer implications utilizing images” (Givens, 2008, ¶ 1). Curiously, verbal correspondence incorporates verbal jargon as well as composed jargon.

The fundamental type of human correspondence is verbal. People use text strings, complex structures, and utilize their thoughts for text. This is the thing that recognizes people from different species – their language capacities. Be that as it may, correspondence with individuals has an alternate component, and numerous individuals have neglected to utilize this component accurately. That is their non-verbal communication. Creatures convey principally through non-verbal communication. To improve the language abilities, people have been marginally expelled from this kind of correspondence. A large portion of our clarification on non-verbal communication is oblivious or subliminal. In that capacity, when you disclose to them classified data, you normally notice the response of that individual to choose whether that individual can be trusted. Instinct is essentially for your mind to enlist not intentionally

 

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