Problem_Set_8 - sanctions Each wants sanctions but also oil...

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ORIE 4350 Spring 2010 Problem Set #8 Due : Wednesday, April 28, 2010 at noon in dropbox Reminder : Write your NetID and section on the first page of your homework!!! Question 1: Textbook Section 8.9: Exercise 1 (a) and (b). Question 2: Textbook Section 8.9: Exercise 5. Question 3: A malevolent country has both nuclear aspirations and lots of oil. A committee of five other countries can vote by majority rule to impose economic sanctions on the malevolent country. If sanctions are imposed, then the malevolent country’s leader has vowed not to sell any oil to those countries that voted for sanctions. Consider the game among the other five countries where each can vote for or against
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Unformatted text preview: sanctions. Each wants sanctions, but also oil: its payoff if 4 if sanctions are imposed but it didn’t vote for them; 3 if sanctions are imposed and it voted for them; 2 if sanctions are not imposed and it didn’t vote for them; and 1 if sanctions are not imposed but it voted for them. (a) If all countries vote for sanctions, does this form a Nash equilibrium? What payoffs to the countries get? (b) If no country votes for sanctions, does this form a Nash equilibrium? What payoffs do the countries get? (c) State a pure-strategy equilibrium that yields a (strongly) Pareto-efficient outcome. Question 4 : Textbook Section 17.8, Exercise 10....
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