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Lecture 25

# Lecture 25 - b Check Stayout/weak is best response which is...

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Lecture 25 Player 1: Enter/Strong, Stay out/weak Player 2: Coop/Enter 1. Check if belief is consistent with strategy a. Player 2 observe the action of player one and then come up with a belief b. p(Stong/Enter) = p(strong).p(strong/enter)/(ditto)+ p(weak)p(enter/weak) c. Said that is was 0.5 either way d. 0.5(1)/[(o.5(1)+0.5(0)] = 1 e. Confirm that belief is consistent with Bay's rule 2. Check that the strategy is consistent with the beliefs a. Check that cooperation gives a higher payoff than fight b. P(Coop) = 50 c. EP(fight) = 0 d. Plug in the payoffs from game one and game two. 3. Check for the EP of Player 1 a. Is enter (Enter/ strong) is the best response

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Unformatted text preview: b. Check Stayout/weak is best response, which is not Player 1: Enter/Strong Enter/Weak Player 2: Coop/Enter P(strong/enter) = 0.5 Test Format 1. Mixed strategy 2. Medium Voter 3. Bayesian Equilibrium 4. T/F questions 5. Baye's Rule's Problem 1. p(s/e) = 0.5(0.5)/[(0.25) + 0.25) = 0.5 a. No updating 2. Check that Coop>fighting a. P(Coop) = 2[(o.5)(50)]= 50 b. EP(fight) = 0.5(0)+0.5(60)= 30 3. EP of player 1 a. Holding constant player 2 b. Enter/strong c. Enter/Weak Player 1: Enter/Strong Enter/Weak Player 2: Coop/Enter P(strong/enter) = 0.75 1. Not perfect Bayesian equilibrium...
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