This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: Econ 171 Spring 2010 Problem Set 2 Solutions to the twostar problems. In some cases I’ve provided more explanation than was asked of you. ** Problem 4 Consider the game shown in the figure, with the payoffs ( a, b, c, d, e, f, g, h, i, j, k, l ) = (2 , 2 , 1 , 3 , 3 , 1 , 3 , 1 , 4 , 6 , 2 , 7). (a) What is the backwardsinduction strategy for each player? Solution: The backwardsinduction strategy profile is ( L 1 L 2 , r 1 l 2 r 3 ). (b) What is the backwardsinduction outcome? Solution: The backwardsinduction outcome is ( L 1 , r 1 ) with payoffs (2 , 2). (c) Two strategies can arguably be considered “equivalent” if they designate the same behavior at all decision nodes that the player will reach with positive probability given her own previous choices as specified by both of the two strategies. For each player, state which (if any) strategies are equivalent to others. Solution: For Player 1, R 1 L 2 and R 1 R 2 are equivalent. For Player 2, r 1 r 2 l 3 and r 1 r 2 r 3 are equivalent and r 1 l 2 r 3 and r 1 l 2 l 3 are equivalent. ** Problem 5 Watson 15.2 Solution: (a) The Nash equilibria are { ( WY, AC ) , ( ZX, BC ) , ( WY, AD ) , ( ZY, BC ) , ( WX, BD ) } ....
View
Full
Document
This note was uploaded on 12/26/2011 for the course ECON 100B taught by Professor Kilenthong during the Fall '08 term at UCSB.
 Fall '08
 KILENTHONG

Click to edit the document details