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old Midterm 1 Answers

old Midterm 1 Answers - (given other player’s response to...

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SP10 Midterm 1 Answers: True or False: T F T F F T T F F F Short Answer: 1. NE = profile of strategies such that each player’s strategy maximizes his or her payoff given the other player’s strategies. To be assured of a NE we need to assume the players are rational and have accurate beliefs about other players’ strategies. 2. Mixed Strategy = a strategy which randomizes over pure strategies. There is no incentive to use a mixed strategy in the short run (you can say to be unpredictable but not that it gets you a higher payoff), in the long run the incentive is to be unpredictable, stability, not let other player get advantage, maximize payoff
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Unformatted text preview: (given other player’s response to your actions), etc. Problems: 1. 2. a. (All choose High) and (All choose Low) are the NE because both of those strategy profiles are such that no player can get a higher payoff by deviating. b. Using Payoff Dominance (All choose High) is the selected equilibrium because each player’s payoff is higher in that equilibrium. Using stability, (All choose Low) is the selected equilibrium because the players are guaranteed their payoff no matter what the other players do. 3. a. No dominant strategies b. A is dominated (by D) and W is dominated (by Y) c. No pure strategy NE d....
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