• Assessment brief available on Blackboard (Bb): 23rd March 2023.
• Clarifications (if needed) on GTP given in L2 tutorials.
• Due date/time of GTP: Word Document to Turnitin by 9th April 2023 (Sunday), 9 pm (Perth, AWST).
• Upload the assignment under your tutor’s name (Bentley), campus name (offshore) under the Assessment tab.
• Write your answers in a new Word document (do not insert answers in this document).
• Write Your Name, Student ID and Tutor’s Name on the first page of your GTP document.
• Please note that this is an individual assessment, and you should not discuss or share your work with others.
Overview of Marks
The GTP consists of two parts: part (A) and (B):
• Part (A) is worth 18 marks
• Part (B) is worth 12 marks
Please see the marking rubric given along with this document. You will be marked on the extent to which you specifically answer the question and provide clear, logical, well-reasoned and sufficient explanations. A good guide on what the marker is looking for in the GTP is recalling the examples/discussion done in your tutorials/lectures.
The GTP is mostly a written analysis. There is a ‘graphical’ component to this assessment where you are to work out the particulars in the 2×2 payoff matrix.
This assessment is not a major research activity. The CORE ESPP text (Units 2 and 3) and relevant lecture and tutorial materials (related to L1 and L2) plus references given in this assessment brief are mostly sufficient for you. However, please feel free to use additional references wherever possible to support your arguments. You are expected in your answers to refer to key economic concepts taught in L0, L1 and L2 and related tutorials, where relevant. Just be wise and careful to write in your own words when you draw upon the lecture slides and CORE readings. Include suitable in-text referencing and a reference list (Chicago style) for any additional sources used.
Context
This game theory presentation relates to two topics.
Part A is based on the first topic, worth 18 marks. The first topic is about climate change with two countries US and China and the Paris Agreement. The Paris Agreement is a legally binding international treaty on climate change adopted by 196 parties at the UN Climate change conference in Paris in 2015 (Source: United Nations Climate Change website). More information on Paris Agreement: https://unfccc.int/process-and-meetings/the-paris-agreement
Part B is on the second topic, worth 12 marks. The second topic is about the high prices of houses in Hong Kong and how game theory can help explain this unique housing market.
Assessment Tasks
Part (A) – 18 Marks.
(700 to 800 or so is the suggested word limit for Part A).
Read the following key article(s) to prepare your answers:
Main Article: (i) “The death of US–China climate cooperation”
Additional Article: (ii) “Rebuilding US-Chinese cooperation on climate change: The science and technology opportunity”
Task:Your game theory tasks for Part 1 are as follows:
Represent this climate change game using the information below:
• There are two players – US and China who have participated in the Paris Agreement.Both US and China, at the time of signing this agreement, made joint announcements of strengthening bilateral cooperation in combating global climate change with some specific targets. (For background knowledge read the Paris Agreement information link provided in the context above).
• Assume the self- interested players continue behaving in a way as described in the article (i) “The death of US–China climate cooperation” over the next two years.
• There are two possible strategies – Cooperate and Not-cooperate.
• This is a one-shot simultaneously played game, where the players are taking actions at the same time.
STEPS:
• Construct a payoff matrix using words for this climate change game. Now work out the associated numerical (hypothetical) payoffs for each quadrant in the game. (5 marks)
• Explain each quadrant of the matrix. (3 marks)
• Predict and explain the likely outcome(s) of this game. Use the relevant game theory concepts (learnt in this unit) and the information given in the articles while explaining the possible outcomes in your answer. (4 marks)
• Explain with reasons whether the predicted outcome will be an optimal or a sub optimal outcome for the world including the two participant nations. Are there any opportunities lost for the two players/nations? Briefly explain the likely implications of your predicted outcome on the players’ specific targets with reference to the climate change. (6 marks)
Part (B) – 12 Marks
(700 to 800 or so is the suggested word limit for Part B)
Read the following key article to prepare your answers:
“Why housing price in Hong Kong is so high? An explanation in game theory”
Note 1: Please do not worry about the technical details given in Tables 1,2 and 3 of the above paper. Make your payoff matrix, just the way we have learnt in this unit.
Note 2: The paper talks about a market structure known as ’oligopoly’ – Oligopoly is a market structure where a few firms dominate the market. Usually, the number of sellers/ firms vary from 2- 20 in such markets.
Hong Kong housing market has been ranked as one of the most expensive housing markets in the world for many years, where housing affordability is a serious issue. Usually in economics demand and supply forces can explain why prices are so high, however the article provided above uses game theory as a tool to explain this unique housing market. Use the explanation provided in the article to explain your answers below.
Task: Your game theory tasks are as follows:
• Based on the information in the above article, construct a payoff matrix using words only (no numbers required). Your possible strategies and the player names should be guided by the information given in the article. Explain each quadrant of the game and the possible strategies of the two players. (4 marks)
• Explain the likely outcome(s) of this game. Use the relevant game theory concepts (learnt in this unit) and the information given in the article while explaining the possible outcomes in your answer. (3 marks)
• Show the policy intervention measures adopted by the government and explain how policy intervention (as in this case) can alter the outcomes of the game in the housing market in Hong Kong. (3 marks)
• Comment on the effectiveness of the policy intervention in enhancing equity in the Hong Kong housing market. (2 marks)
