More ECO4400 practice problems_1

# More ECO4400 practice problems_1 - working person. A...

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More practice problems with answers: Normal Form Game: Find all NE of: X Y Z A 6,2 3,7 6,4 B 4,1 9,2 2,9 C 8,8 0,7 1,1 Answer: (C,X) and (player 1 chooses A with prob 7/10 and B with prob 3/10, player 2 chooses Y with prob 2/5 and Z with prob 3/5) Extensive Form Game: Find all SPNE of: Answer: (B/E, D/C/K/M)

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Repeated game: Find an SPNE of the repeated game where the stage game X Y X 3,3 0,8 Y 8,0 2,2 is repeated with probability 0.5. What is the smallest p that will ensure grim trigger is an SPNE? Answer: An SPNE is for both players to choose Y every round for every history. The smallest p is 5/6. Continuous game: Player 1 chooses x, Player 2 chooses y. Player 1’s payoff is: x + xy – x^2, Player 2’s payoff is: y + xy – y^2. Find a NE. Answer: x=1, y=1 Signaling game: Worker is lazy with prob. 0.5 and hard working with prob 0.5. Worker can go to college or not. The cost of college is 200 for a lazy person, and 50 for a hard
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Unformatted text preview: working person. A Manager observes whether the worker went to college and either hires or fires him (but doesn’t know type). The manager gets a payoff of 200 if he hires a hard worker, 0 if he hires a lazy guy, and 150 if he fires the guy (either type). The worker gets a benefit of 150 if he is hired, 0 if he is fired. Find a PBNE. Answer: One PBNE is for Worker to choose no college if lazy, college if hard working; Manager choose hire if the worker went to college, fire if the worker did not go to college, and beliefs that someone who chose college is hard working with prob 1 and someone who did not is lazy with prob 1. Another PBNE is for both types of worker to choose no college, the manager to fire regardless of whether they went to college, and the beliefs to be that the worker is lazy with prob 0.5 regardless of whether they went to college....
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## This note was uploaded on 02/24/2011 for the course ECO 4400 taught by Professor Lightle during the Fall '10 term at FSU.

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More ECO4400 practice problems_1 - working person. A...

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