HmWk01 - Economics 1200 Spring 2012 Homework # 1 Write your...

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1 Economics 1200 Spring 2012 Homework # 1 Write your answers to the following questions on separate sheets of paper. Your answers are due in class on Tuesday, January 24 . Late homeworks are not accepted . 1. A prisoner is trying to escape from prison. He can attempt to climb over the prison wall or dig a tunnel under the prison wall. The warden can prevent the prisoner from climbing over the wall by posting guards at the wall and he can prevent the prisoner from tunneling under the wall by having regular inspections of cells, but he has only enough guards to do one or the other and not both. a. Choose (and justify) some simple numerical payoffs for this game, and then write the game in normal form . Be sure to label the strategies and players in your game matrix. Is this game constant sum or non-constant sum? Explain/justify your answer. b. Now express this game in extensive form, assuming the prisoner and warden make their decision at the same time. Use a dashed line to indicate the information set for the second mover in the game tree. c. What is the mutual best response (Nash equilibrium) for the simultaneous move version of this game, as you have depicted in parts a or b? Give your reasoning. d.
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HmWk01 - Economics 1200 Spring 2012 Homework # 1 Write your...

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