homework 2 answers - ECON 398 HOMEWORK 2 SOLUTIONS...

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ECON 398 HOMEWORK 2 SOLUTIONS Professor Ozdenoren 1. In the following game between Donna’s and Pierce’s find the equilibrium using iterated elimination of dominated strategies. Answer Medium dominates Low for Donna’s. In the second round, High dominates both Medium and Low for Pierce’s. In the third round, Medium dominates High for Donna’s. The equilibrium is Medium for Donna’s and High for Pierce’s. PIERCE’S 2. Consider a game in which four players (who can’t communicate with each other) each have to write either “$2” or “$10.” If at least one player writes “$2,” then each player receives the amount of money that she wrote. If, however, every player writes “$10,” then no player gets any money. Determine (and state) how many Nash equilibria there are in this game (in pure strategies), explain why those sets of actions are Nash equilibria, and explain why no other set of actions is a (pure strategy) Nash equilibrium. Answer:
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homework 2 answers - ECON 398 HOMEWORK 2 SOLUTIONS...

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