{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

PS2solutions

# PS2solutions - Econ 171 Spring 2010 Problem Set 2 Solutions...

This preview shows pages 1–2. Sign up to view the full content.

Econ 171 Spring 2010 Problem Set 2 Solutions to the two-star 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 backwards-induction strategy for each player? Solution: The backwards-induction strategy profile is ( L 1 L 2 , r 1 l 2 r 3 ). (b) What is the backwards-induction outcome? Solution: The backwards-induction 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 ) } . Of these, only ( WY, AC ) and ( ZX, BC ) are subgame perfect.

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern