2003_midterm_1 - 14.12 Game Theory-Midterm I 10/15/2003...

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14.12 Game Theory-Midterm I 10/15/2003 Prof. Haluk Ergin Instructions: This is an open book exam, you can use any written material. You have 1 hour and 20 minutes. Each question is 35 points where the bonus question 3(c) accounts for the extra 5 points. Good luck! 1. Consider the following two player game where Player 1 chooses one of the three rows and Player 2 chooses one of the three columns: C 1 C 2 C 3 R 1 2,-1 4,2 2,0 R 2 3,3 0,0 1,1 R 3 1,2 2,8 5,1 (a) What are the strategies that survive IESDS? (b) At each step of the elimination what were your rationality and knowledge assumptions? (c) Find all Nash equilibria, including the mixed one. 2. Consider the following extensive form game with perfect information: (3,4) (0,1) (1,0) 1 2 2 A B Ll r 1 a b R Figure 1: (a) Find out the backwards induction outcome. (b) At each step of the backwards induction, what were your sequential rational- ity and knowledge assumptions? (c) Determine the strategies of each player and write out the corresponding nor- mal form game.
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This note was uploaded on 11/28/2011 for the course ECONOMICS 114.126 taught by Professor Muhammadyildiz during the Spring '05 term at University of Massachusetts Boston.

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2003_midterm_1 - 14.12 Game Theory-Midterm I 10/15/2003...

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