PS2 Solution

# PS2 Solution - A M N M(0,2,0(0,0,0 N(0,0,0(2,0,2 Nash...

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Kaushik Basu Fall 2009 Econ 367 : Game-Theoretic Methods Problem Set 2 1. (a) N = {1,2} (b) S 1 = {U,D} and S 2 = {L,R} (c) Π 1 (U,L) = Π 2 (U,L) = 2; Π 1 (U,R) = Π 1 (D,L) = Π 2 (U,R) = Π 2 (D,L) = 0; Π 1 (D,R) = Π 2 (D,R) = 1 (d) Nash Equilibria: {(U,L), (D,R)} 2. L U (2,-1) D (0,10) Nash Equilibrium: {(U,L)} 3. CASE I: C chooses M B A M N M (2,2,2) (0,0,0) N (0,0,0) (0,0,0) C chooses N B A M N M (0,0,0) (0,0,0) N (0,0,0) (2,2,2) Nash Equilibrium: {(M,M,M), (N,N,N)}

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CASE II: C chooses M B A M N M (2,0,2) (0,0,0) N (0,0,0) (0,2,0) C chooses N B
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Unformatted text preview: A M N M (0,2,0) (0,0,0) N (0,0,0) (2,0,2) Nash Equilibrium: {(M,M,M), (M,N,M), (N,M,N), (N,N,N)} 4. Other Person You Sparrow Finch Magpie Orange (0,0) (1000,1000) (0,0) Lemon (0,0) (0,0) (999,999) Tangerine (1000,1000) (0,0) (0,0) Nash Equilibrium: {(Orange, Finch), (Lemon, Magpie), (Tangerine, Sparrow)} There are several ways to make your decision. Just make sure you back up your choice with a rational explanation of why you made it. You may wish to consider Nash equilibria, definitions of rationality, and focal points....
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PS2 Solution - A M N M(0,2,0(0,0,0 N(0,0,0(2,0,2 Nash...

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