S'11
Prof. Stahl
ECO 354K
Problem Set No. 10
Due Friday, April 8 by 5pm
Note: Please submit your completed HW to the Econ front desk
for the TA
.
Write “Jonathan Lhost” at the top and have them time stamp it.
1.
Consider the following game with payoff uncertainty.
The payoff matrix is either A or B:
2)
2)
L
R
.
L
R
.
1)
U
0, 0  5,2

1)
U 2, 0  5,2

D 2, 7  7, 5

D
0, 5  7, 7

A
B
(a) Suppose that at the time they must choose, neither player knows whether payoffs will be
given by A or B.
After they choose, the matrix will be chosen by a public throw of a die such
that the probability of A is 2/3.
Find all the sequentially rational Nash equilibria.
(b) Suppose the die is thrown before the players choose, but that only player 1 observes the
outcome before she chooses; i.e. player 1 knows whether the payoff matrix is A or B, but
player 2 only knows that matrix A has a 2/3 chance of being the payoff matrix.
Assume that
player 2 does not observe player 1's choice before he must choose.
Find all the sequentially
rational Nash equilibria.
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 Spring '11
 econ
 Game Theory, Bachelor's degree, high ability, low ability

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