Economic Assignment
Part (a)
The case of panic buying has currently been adopted by most of the Western and European states. However, the critical predicament is the witnessed the failure coordination amongst different people taking part in it.
Theoretical explanations
Let’s assume that there exist two players with the name “,” while the other is known as “.” Suppose there exists similarly two forms of buying strategies, namely “” together with “.” For this scenario, the pronouncement of “” relies on whatever “” takes to the effective strategy. Take, for instance, in case everyone else assumes a “ ” strategy like an excellent alternative in support of an individual towards selecting a similar tactic for “ .” Such would bring about a condition that is worse off. Again, for the situation in which “” opts to go in for the plan known as “,” at that juncture, the best stratagem for “an individual” shall be similar just like other strategies chosen by others. For that matter, within such a scenario, there shall be an occurrence of multiple Nash Equilibrium case.
Payoff Matrix
Table 1: Playoff Matrix
As indicated in Table 1 above, we can also consider explaining the payoff matrix. For the case of the payoff matrix, an individual’s decision relies on the choice made by others. In case we take into consideration the fact that “” moves for the option for selecting “,” in such a scenario, an excellent alternative that can be deemed appropriate for “” is to go for “.” This is because 3>2 as illustrated by the payoff matrix. Now, when we take into consideration the fact that “individual” selects “act as normal,” in such instance, an excellent alternative that can be assumed by “” shall be choosing “.” This again is so because 3>2. For that matter, it is a single Nash Equilibrium, which is seen to be the best alternative. That is, “.”
For a second time, suppose we look into a scenario in which “everyone else” chooses by deciding towards doing “.” In such an instance, an excellent alternative in support of “an individual” shall be as well “panic buying.” This is because 1>0. At the same time, in case ” an individual” decides to do “ ,” then an excellent in support of other individuals certainly is to go for “” because 1>0 as well. For that matter, this is similarly another form of Nash Equilibrium because the participant only has one alternative to choose, which is “ .” For that matter, there exists in this situation several Nash Equilibrium.
Part b
A case firm limits the sale of groceries, toilet papers, groceries, and other essential products from the stores due to panic buying; in such cases, the company is likely going a more significant dispute dilemma in equity and efficiency. As a result of sales restrictions, the prices of essential commodities would rise because of fewer supplies and skyrocketing demands of such products. This is because individuals or rather people with higher incomes shall obtain such items through higher prices. On the other hand, the low-income earners in society shall not be in a position of acquiring such items. Ideally, this brings about inequality issues.
As from the article, supermarkets of different states such as Ireland and the UK took multiple procedures in curbing the panic buying predicament. The initiatives that were taken incorporated the following:
- Within various countries, available supermarkets take the initiative of seeking assistance from the government. It is the government, which regulates the number of people purchasing commodities such as groceries and tissue papers. The approach initially would never be given preference by those purchasing such products. However, sellers welcomed such pronouncements.
- Most of the supermarkets started an exceptional slot in support of elderly persons to purchase the commodities. For nations such as Ireland and the UK, some particular periods were allotted to elderly individuals towards purchasing essential items. Such pronouncements were welcomed by “ one player” such as elderly persons. “Another player,” for instance, the sellers initially never welcomed such a move, but they later consented to the actions.
- Multiple supermarkets were deliberately charging their clients’ exorbitant prices under government regulations of curbing panic buying demand. In this state, the equilibrium level was achieved. The sellers preferred the move though buyers never loved the notion
Part c
In the game played in this situation is known as a “.” For this situation, player A is regarded to be ,” while on the other hand, player B is deemed to be the “.” Suppose we have two methods to be chosen by player A, such as hoarding denoted by H or normal, which can be distinguished by N. Then we can assume that the player B shall be having four strategies, which incorporate HN, NN, NH, and HH. In this situation, the sequential payoff matrix shall be provided, as shown in the diagram below:
From the diagram above, suppose player B decides to choose HH. In such a scenario, an excellent alternative favorable for player 1 will be to select H. This alludes to the fact that two is more significant than zero. On the other hand, in the case where player A opts to go for H, then an excellent alternative for player B will be as well to go for option H. For that matter, alternative HHH becomes a single Nash Equilibrium. Again, when player B decided to choose HN, then an excellent alternative that can be picked by player A certainly will be to select N. This is because three is more significant than two. Alternatively, when player A decides to choose N, then in such a scenario, an excellent alternative for player B shall be going for HN because three is more significant than other numbers. For that matter, NHN becomes the other alternative Nash Equilibrium. Additionally, the provided preference impacts the allocations because if player A decides to hoard, player B will choose not to practice the hoarding-player B will select the Normal option, and the alternative is valid. Therefore, this shall be brought about inefficiency within the market.