Problem Set 1.docx

# Problem Set 1.docx - PROBLEM SET 1 1 Formulate the...

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P ROBLEM S ET 1 1. Formulate the following as a normal form game: Ann and Beth are not on speaking terms but have a lot of common friends. Both want to invite the common friends to a dinner party this weekend, either Friday or Saturday evening. Both slightly prefer Saturday. If both set the party at the same time, this will be considered a disaster with a negative payoff (-10) for both. If one plans the party on Friday and the other on Saturday, the one having the Saturday party gets a payoff of 5, and the other of 4. 2. There are two players. Each player is given an unmarked envelope and asked to put in it either nothing or \$300 of his own money or \$600 of his own money. A referee collects the envelopes, opens them, gathers all the money, then adds 50% of that amount (using his own money) and divides the total into two equal parts which he then distributes to the players. (a) Represent this game frame with table showing the change in wealth of each player (money received minus contribution). (b) Suppose that Player 1 has some animosity towards

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• Winter '19
• Sudhendra
• Game Theory, Questions, Hunting

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