Final_2010 - MS&E 246 Feryal Erhun Final Examination...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
MS&E 246 Final Examination Feryal Erhun March 15, 2010 Instructions 1. Take alternate seating. 2. Answer all questions in the blue books provided. If needed, additional blue books will be available at the front of the room. Answers given on any other paper will not be counted. 3. Notes, books, calculators, and other aids (except the cheat sheet) are not allowed. 4. The examination begins at 3:30 pm, and ends at 6:30 pm. 5. Show your work! Partial credit will be given for correct reasoning. Honor Code In taking this examination, I acknowledge and accept the Stanford University Honor Code. NAME (signed) NAME (printed) 1
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Problem 1 (15 points). Answer each of the following questions TRUE or FALSE. If TRUE, provide a brief (1-2 sentence) justification for your answer; if FALSE, provide a brief counterexample. (1 point per correct answer; 4 points per correct justification/counterexample) (a) (5 points) Consider the following payoff table and assume g > h > 0 , w > 0 , v > 0 . Company Monitor No monitor Worker Work 0 , - h w , - w Shirk w - g , v - w - h w - g , v - w This game is dominance solvable when w < g . (b) (5 points) Consider the following game: Player 2 C D Player C 1 , 1 - 1 , 2 1 D 2 , - 1 0 , 0 Suppose that this game is played infinitely many times with discount fac- tor δ . Consider the following strategies: Play C if all previous outcomes have been (C,C), otherwise, play D forever. These strategies form a Nash equilibrium when δ 1 / 2 . (c) (5 points) Alice is a moderate drinker who plans to buy a bottle of wine. Her utility is U = θq - t where q is the quality of the wine, t is the price of the wine, θ is a positive parameter that indexes her taste for quality. If Alice decides not to buy any wine, her utility is 0. Alice may either be a “coarse” (in which case her θ is θ 1 = 5 ) or a “sophisticated” (in which case her θ is θ 2 = 10 ) drinker with equal probability.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern