1
E
CONOMICS
S1050
H
ARVARD
U
NIVERSITY
S
UMMER
2009
S
UMMER
S
CHOOL
P
ROBLEM
S
ET
2
A
NSWERS
due
July 9
, in class
Show all calculations, explain all answers (up to 5 lines), and fully label graphs.
Also:
(a) staple sheets, (b) acknowledge assistance, (c)
highlight
final answers, and (d) write neatly!
1.
Consider the following game:

2.5

L
M
R
U
3,4
2,2
0,1
M
2,2
4,3
1,2
D
1,3
1,2
3,2
a)
Is there a dominant or dominated strategy for either player?
Reduce the game by iterated elimination of dominated strategies (IEDS), if possible.
Find the bestresponse of each player to the other’s strategies:
L
M
R
U
3,4
2,2
0,1
M
2,2
4,3
1,2
D
1,3
1,2
3,2
row player
=
player1
, having strategies = {U,M,D}, denoted by red circles
column player
=
player2
, having strategies = {L,M,R}, denoted by blue diamonds
(These terms and depictions will be used in every assignment in this course.)
A
dominant strategy
for a player is the
best
strategy to follow no matter what the other
player does.
Here, if there is a dominant strategy for the row player,
all
the circles would
line up in that row;
if there is a dominant strategy for the column player, all the
diamonds would line up in that column.
This is not the case here, so
neither player has a dominant strategy 
0.1
