quiz2-sol - Quiz 2 Questions and Solutions ECOS3012 -...

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Unformatted text preview: Quiz 2 Questions and Solutions ECOS3012 - Strategic Behavior, Semester 1, 2011 You can retake this Quiz for practice and then compare your answers with the solutions by downloading the other version made available on Blackboard. Begin Quiz Q1. Consider a two player strategic form game in which each player knows the payoffs of the other player as well as her own payoffs. A We may apply the idea of IEDS to this game. B We may not be able to compute best responses. C We can apply IEDS only if the payoffs are in fact common-knowledge D Payoffs as well as the fact that neither player plays a weakly dominated strategy need to be common-knowledge. Solution : Right from your notes. Check Slide 13 from Lecture 3. Part (b) is not the right answer – if I know what strategy my opponent is playing, I can compute what strategy of mine will give the highest payoff, since a player always knows her own payoffs. Q2. Rationalizability involves A Successively removing strategies that are “never a best response” B Successively removing strategies that are “never a best response” C Both Part (a) and Part (b). D Neither Part (a) nor Part (b). Solution : This is basically the definition of Rationalizability. Check your class notes from Lecture 4. We did this in the second half of the lecture, shortly after the break, in case you would like to check out the podcast. Otherwise, simply re-read the chapter titled “Rationalizability and Interated Dominance”. Q3. Consider the following game. A This game can be solved using IEDS. B This game has a unique rationalizable strategy profile. C This game can be solved using IEDS and that is the unique rationalizable strategy profile. D None of the above. l c r t 4,3 3,7 4,4 m 5,5 5,-1 4,2 b 3,3 4,4 6,1 1 Solution : Recall that a strategy profile is Rationalizable if it survives iterated elimination of strategies that are ’never a best response’ (NBR). The best response to each strategy of P2 is shown at the bottom of the matrix and to that of P1 is shown to the right of the matrix. In the first instance, remove ’r’ as it is NBR for P2. In the smaller game thatthe matrix....
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quiz2-sol - Quiz 2 Questions and Solutions ECOS3012 -...

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