Dept of Economics - Assignment Example

After reducing the training time, the payoff will automatically increase. This is because the amount of time invested is less than the prize awarded. Unlike in the first case, the result after multiplying the probability with the prize and less the cost is a positive figure.This time allocation is not an equilibrium. This is for the reason that they both are equally talented but Shirley gets an added advantage by training longer than Laverne. They should have trained for equal time for the allocation to be equilibrium.

The allocation of 5 hours of training per week is not Nash equilibrium. This is because the payoff increases to 6 when the training time reduces to 4 and reduces 4 when the training time increases to 6.The allocation is no longer a Nash equilibrium since the payoff greatly changes between the competitors with the prize increment.(a) with regard to the above graph, I suggest that the tournament with higher/ better performance is the net tournament. (b) Yes, my prediction in (a) is consistent with the contest theories. (c) The coefficient is used to show which of the two participant tournaments, (net tournament and gross tournaments) has the highest performance. (d) This kind of coefficient is not important at the 5% level.

This is for the reason that dummy variables are not significant at 5% level. (e) The t-statistic is sort of a departure ratio of an approximated parameter from its speculative value as well as its usual error. It is normally used in theory testing, for instance in the t-test of Students, in bootstrapping, in addition to in the amplified Dickey-Fuller test. (f) According to this study, female are better golfers than male. This is because the female has a positive coefficient of 1unlike male who has a zero coefficient.