05exam - Prof. William H. Sandholm Department of Economics...

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–1– Prof. William H. Sandholm Department of Economics University of Wisconsin March 10, 2005 Midterm Exam – Economics 713 1. (20 points) ( i ) State the Classic Folk Theorem. Be sure to present explicit definitions of any terminology related to payoffs that you use. ( ii ) Prove that the conclusion of the theorem holds for any payoff vector v that corresponds to a pure action profile of the stage game (and that satisfies the requirements of the theorem). 2. (35 points) Consider the two player normal form game G below, in which player 1 is the row player and player 2 is the column player. (Only player 1’s payoffs are shown.) a b c d T 5, · 3, · 1, · 0, · B –1, · 0, · 4, · 7, · Define the following sets: J = { v R 2 : v = ( u 1 ( T , s 2 ), u 1 ( B , s 2 )) for some s 2 S 2 }; K = the convex hull of J ; L ( c ) = { w R 2 : w 1 c and w 2 c }. ( i ) Explain in game theoretic terms what it means for a vector to be an element of the set K . ( ii

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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 University of Wisconsin.

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05exam - Prof. William H. Sandholm Department of Economics...

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