Quote:
Originally Posted by checktheriver
Part A :
Yes, any (x,y) with x+y=1 is a NE.
Differentiating to get the max is good. Not sure if you're aware of this but finding the points s.t. df/dx=0 isn't enough, you also need to check that the max can't be on the boundary (in this case it's easy since the derivative is > 0 for x<1-y and <0 for x>1-y).
Part B :
Yes x=0 but then player 2's optimal choice is still 1-x=1, so the NE is (0,1).
Thanks! One more question regarding game theory (Cournot model):
Say we have k firms in a market where each of the firms will choose a quantity to produce [0,100]. Let the total quantity be defined as Q = q1 + ... + qk where each of them have the same payout
p(q1,...,qk) = (100-Q)*qi
if Q<= 100
It is easy to find the Nash equilibrium for 2 firms using best responses etc. but I want to find a nash equlibrium (pure) for each k (in a market with k firms and not only 2). I guess a start is to write each payoff and take the derivative w.r.t. each firm, right?
p1 = (100-Q)*q1
.
.
.
pk = (100-Q)*qk
then partial derivatives of each one and then I get the best choice for each firm. Then what would one do?