微观经济学第( 曼昆)17、18章.ppt

* * Understanding the payoffs: Mutual cooperation is the benchmark outcome: Payoffs in other cells are differences in votes received relative to the mutual cooperation outcome. (This does not mean that there is a tie in the mutual cooperation outcome or the mutual defection outcome. It means that the winner will be decided by factors other than whether attack ads run or not.) Consider R’s decision. R is better off defecting (running ads attacking D) whether D cooperates or defects. If D cooperates, R’s attack ads result in 1000 more votes for R and 3000 fewer votes for D. If D defects, R loses fewer votes if he runs the attack ad than if he cooperates. Hence, running attack ads is a dominant strategy for R. The payoffs here are symmetric, so defecting is also D’s dominant strategy. This game has a Nash equilibrium in which both candidates defect. This is why, in the real world, we see so many attack ads in the weeks leading up to an election. * * This slide considers the effects of the attack ads on election outcomes and on social well-being. The negative impact on social well-being is like a negative externality: the “bystanders” are voters who are worse off as a result of the candidates’ actions. * * If you’re so inclined, this might be a good place to mention the infamous phone call in which Robert Crandall, CEO of American Airlines, tried to convince Braniff’s CEO Howard Putnam to raise fares 20%. If you can dig up a transcript of the conversation to read in class (try a simple Google search), students will find it interesting: it has lots of curse words. * * As I prepare this PowerPoint, I am shopping for a home theater sound system. My experience is relevant to this slide, and students have had similar experiences when shopping for stereo components, computers, or other products. I visited a local store to check out different brands and models. The salesperson at this store is very knowledgeable, and the store provided several co