Intermediate Microeconomics: A Modern Approach, Seventh Edition

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Econ 301 – F06 PROBLEM SET 8 – Not due but definitely DO before the final! Wissink 1. Critically evaluate the following statement. Given a fully described game, a dominant strategy for a player will also be a best response strategy for that player, furthermore, all best response strategies are dominant strategies. 2. In a typical analysis of OPEC you read things like the following, “The International Energy Agency reported that oil production by OPEC rose this month. Part of this increase was attributed to Iran's refusal to sign the group's production sharing program and its subsequent increase in output. OPEC's other members however cooperated with their agreements and produced close to their agreed upon quota.” Suppose we could model this issue as a game between Iran and the rest of OPEC. Each player has two strategies: Low quantities of oil production and high quantities of oil production. The extensive form (a.k.a. tree form) of the game is as follows: NOTE : The payoffs are written as
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problem8 301 f06 - Econ 301 F06 PROBLEM SET 8 Not due but...

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