Homework 7 Answers

Homework 7 Answers - Economics 111: Intermediate...

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Spring 2006 Homework 6 Answer Key Professor: Pedro Dal Bó 1. Football or Movie: Players 1 and 2 were planned to go see either a football game or a movie but haven’t decided on one. Now it is time to go to one of the two places but unfortunately they are not together and have no way of communicating with each other. Each of them must decide separately. If both go to the movie theater or both go to the stadium they get an utility of 1 since they are together. Player 1 likes football and gets an additional utility of 1 from watching the game. Player 2 likes movies and get an additional utility of 1 from watching a movie. If they are alone they get a total utility of zero since they can only enjoy things when they are together. a. Write the payo f s of the game in the matrix form. Player 2 Player 1 FM F2 , 10 , 0 M0 , 01 , 2 b. Find the pure strategy Nash equilibria. (F,F) and (M,M). c. Find the mixed strategies Nash equilibrium (the one with randomizations). For player 1 must be indi f erent between F and M to be willing to randomize. For that, the probability β that2goestoFmustbesuchthat U 1 ( F )= U
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This note was uploaded on 02/13/2011 for the course ECON 111 taught by Professor Dalbo during the Spring '08 term at Brown.

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Homework 7 Answers - Economics 111: Intermediate...

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