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Econ 398 Homework 6 Suggested Solutions
1) Use the characterization from class to check for mixedstrategy Nash Equilibria.
First note that there are four pure strategy equilibria, each where one person drives Straight, and
the other person either swerves Left or swerves Right.
Next notice that Stop is dominated for Daisy by, for instance, a strategy that puts probability
weight of .4, .2, .4 respectively on the strategies Left, Straight, and Right.
So Stop won’t be used
in any Nash Equilibrium.
Consider strategies where one player plays a pure strategy and the other randomizes over two or
more strategies.
Notice that if BillyJo drives Straight, Daisy is willing to randomize over Left
and Right.
Furthermore, if she randomizes over Left and Right, BillyJo will drive Straight.
There is therefore a whole component of equilibria where BillyJo plays Straight (with
probability 1), and Daisy plays Left with probability
q
and right with probability
1q, where
q
∈
[0,1].
Then there is a similar such equilibrium where Daisy plays Straight and BillyJo plays
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This note was uploaded on 04/14/2010 for the course ECON 398 taught by Professor Emre during the Spring '07 term at University of Michigan.
 Spring '07
 Emre

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