06solution - Prof. William H. Sandholm Department of...

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Unformatted text preview: Prof. William H. Sandholm Department of Economics University of Wisconsin March 9, 2006 Midterm Exam Solutions Economics 713 1. Statement (A) is always true: u 1 ( s 1 , s 2 ) min s 2 S 2 u 1 ( s 1 , s 2 ) for all s 1 S 1 and s 2 S 2 . max s 1 S 1 u 1 ( s 1 , s 2 ) max s 1 S 1 min s 2 S 2 u 1 ( s 1 , s 2 ) for all s 2 S 2 . min s 2 S 2 max s 1 S 1 u 1 ( s 1 , s 2 ) min s 2 S 2 max s 1 S 1 min s 2 S 2 u 1 ( s 1 , s 2 ) = max s 1 S 1 min s 2 S 2 u 1 ( s 1 , s 2 ) . Statement (B) is false in Matching Pennies: there, the minmax payoff is 1, which strictly exceeds the maxmin payoff of 1. 2. We first describe each players incentives: Player 1: B is strictly dominated. T is weakly preferred to M iff 2 ( R ) 1 2 . Player 2: L is weakly preferred to R iff 1 2(1 ( w ) 3 ( l )) iff ( w ) 3 ( l ) 1 2 ....
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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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06solution - Prof. William H. Sandholm Department of...

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