02exam - Prof. William H. Sandholm Department of Economics...

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–1– Prof. William H. Sandholm Department of Economics University of Wisconsin March 12, 2002 Midterm Exam – Economics 713 1. (10 points) Dave has preferences over lotteries which assign probabilities p = ( p a , p b , p c ) to three possible prizes: an apple, a banana, and a cherry. Suppose that Dave is indifferent between the lottery p 1 = (1, 0, 0) and the lottery p 2 = (0, 1 2 , 1 2 ), and that Dave strictly prefers the lottery p 3 1 2 , 1 2 , 0) to the lottery p 4 = (0, 3 4 , 1 4 ). Are these preferences consistent with the von Neumann–Morgenstern axioms? 2. (10 points) Prove the following statement: If in the extensive form game Γ no player controls more than one information set, then all (normal form) perfect equilibria of G ( ) correspond to sequential equilibria of (i.e., each perfect equilibrium of G ( ) is equivalent to a strategy profile in some sequential equilibrium of ). 3. (10 points) Suppose that in the game below, player 1 chooses A and player 2 chooses E .
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This note was uploaded on 08/08/2008 for the course ECON 713 taught by Professor Sandholm during the Spring '08 term at Wisconsin.

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02exam - Prof. William H. Sandholm Department of Economics...

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