GraduateGameTheoryHomework1-2011 - Homework Assignment#1 Graduate Game Theory 1 Let C = cfw_w x y z denote a strict preference ordering,1 denote

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Homework Assignment #1 Graduate Game Theory 1. LetC={w, x, y, z},denote a strict preference ordering,1denote indifference. Calcu-late a vNM utility function,u, consistent with the following preferences:wxyzand the following equivalent lotteries:x(wwith probability 0.65zwith probability 0.35y(wwith probability 0.4zwith probability 0.6(Hint: it is without loss of generality to assumeu(z) = 0 andu(w) = 1.)2. Use the vNM utility function,u, that you derived to calculate which of the followinglotteries,λ1orλ2, is preferred:λ1=wwith probability 0.25xwith probability 0.05ywith probability 0.25zwith probability 0.45λ2=wwith probability 0.05xwith probability 0.50ywith probability 0.10zwith probability 0.353. For each of the following descriptions, draw an extensive game form that represents thedescribed strategic situation.(a) There are two players, 1 and 2.  #### You've reached the end of your free preview.

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