Posted: March 1st, 2014
1. Networks Effects.
1.     Networks Effects.  Considerthefollowingsituation:   assumewehave anewgood with networkdemand.  Sonoonehas joinedthenetworkjustyet.   Thereare100potentialadoptersandtherereallyisactuallyonlyabenefitifatleast50ofthem join. Let’sassumethenetworkexternalityisapproximatelythesameforallvaluesof n1 <50andhigherforallvaluesofn2  ≥50wheren1  isanynumberofadoptions lowerthan50andn2  isanynumberofadoptionsequalto orabove50. Let’smodel thisasatwoplayergamewhereeachplayerhasthestrategiesofJoinandNot. Assumethatthepayoffscorrespondingtothefourstrategyprofilesarerankedasfollows: (Join,Join),(Not,Join),(Join,Not),(Not,Not).Writedownyourgameandsolveforall equilibria(i.e.pureandmixed).
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