S2010_Exam2_solutions

S2010_Exam2_solutions - NAME: Econ 171 (Grossman) Spring...

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

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: NAME: Econ 171 (Grossman) Spring 2010 Exam 2 Solutions May 13 You have 75 minutes to take this exam. Please answer all 4 questions, each of which is worth 15 points. Point subtotals are indicated. Show your work to obtain full credit. 1. Consider the extensive-form game shown in Figure 1. R L 1 r 1 2 , 1 l 1 1 , 2 2 r 2 l 2 , 3 2 r 1 , 4 l 2 , 2 1 Figure 1: The game from question 1. (a) [5] List the strategies for each player. Answer : S 1 = { Ll, Lr, Rl, Rr } and S 2 = { l 1 l 2 , l 1 r 2 , r 1 l 2 , r 1 r 2 } (b) [5] Find the Nash Equlibria. Answer : ( Ll, l 1 l 2 ) and ( Lr, l 1 l 2 ) (c) [5] Apply backwards induction and state the resulting SPNE. Answer : 1 B A 5 , 5 1 D C 2 F 4 , E 6 , 6 F 4 , 4 E , 4 1 Figure 2: The game from question 2. 2. Consider the game shown in Figure 2. (a) [5] Find all the pure-strategy Nash equilibria of this game. Answer : ( BE, C ), ( AE, D ), and ( AF, D ) (b) [5] Which of these are subgame perfect? Answer : ( BE, C ) and ( AF, D ) (c) [5] Challenge question : There is a concept called forward induction that can be used to argue that one of the SPNE is unreasonable. We havent studied it inused to argue that one of the SPNE is unreasonable....
View Full Document

Page1 / 4

S2010_Exam2_solutions - NAME: Econ 171 (Grossman) Spring...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online