This preview shows page 1. Sign up to view the full content.
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
This is the end of the preview. Sign up
to
access the rest of the document.
This note was uploaded on 06/09/2011 for the course ECON 354 taught by Professor Econ during the Spring '11 term at University of Texas at Austin.
 Spring '11
 econ

Click to edit the document details