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ECONOMICS 450.02  Strategic Choice (Winter 2010)
MIDTERM EXAMINATION (February 11, Thursday)
Time: 80 Minutes
Total: 100 marks
1.a (5 mks). Write your name and student number on the cover of your exam book (2 mk), and on
the top of this page (1 mk) bef
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Answer Key for ECON 450 (Winter 2014)
5.1 (Page 267)(30 marks). The game involving Rembrandt's paintings is just like Caveat Emptor
(figure 10.1), with V = $20 million, W = $1 million, p(Good) = p(Bad) = 0.5, p = $5 million, and
c = $0.1 million. The sequ
Answer Key for ECON 450 (Winter 2014)
4.1. (#1, P207) First we consider the 3 x 3 Cournot market game of figure 6.10. At every final
subgame, the unique subgame equilibrium pays (1600, 1600). Adding this to the entries in the payoff
matrix of figure 5.1,
Answer Key for ECON 450 (Winter 2014)
3.1.
If IBM goes first, then the subgame perfect equilibrium is for IBM to smash, and for
Telex to stay out. If IBM accommodates, then at the final subgame Telex enters. If IBM
smashes, then at the final subgame Telex
Answer Key for ECON 450 (Winter 2014)
2.1. (a) Since the investor is riskneutral, then the utility function is just the identity function,
that is
u (m) = m
So, if he does not invest his money, then the utility value of his money is
u(100, 000)= $100,000
Econ 450  Problem Set (Winter 2014)
#7 (4/3, No due date)
7.1 Consider = cfw_N, v(.), where N = cfw_1, 2, 3, v(1) = 0, v(2) = v(3) = 0.8,
v(12) = v(13) = v(23) = 2.4, v(123) = 4.8.
(a) Compute its Shapley value (5 mks);
(b) Show that the Shapley is in th
Econ 450  Problem Set (Winter 2014)
#6 (3/18, due on 4/3, Thursday)
6.1
a) Solve Problems #1 and #2 in Chapter 13 (p 346).
(5 mks each)
b) Same data as in part (a). Player 1 is risk neutral and player 2 is risk averse, with utility
function u2 = (cash)0.
Econ 450  Problem Set (Winter 2014)
#5 (3/6, due on 3/18, Tuesday)
Solve Problems #1 (30 mks), #2 (30 mks), and #6 (40 mks) in Chapter 10 (p267).
Hint to #1 Treat it as the usedcar dealers problem discussed in class.
(Number refers to Gardner Text ).
Pa
Econ 450  Problem Set (Winter 2014)
#4 (2/25, due on 3/11, Tuesday)
4.1
Solve Problems #1 (use Fig 6.10 for the first part), and
#2 (use Figure 4.2  Figure 5.2 should be 4.2) in Chapter 8 (p 207).
(25 mks each)
4.2 Solve Problem #8 (the section # should
Econ 450  Problem Set (Winter 2014)
#3 (1/30, No due date)
This assignment will not be graded. You should do it first yourself, then check your
own answers using the solutions.
3.1 Solve Problem #1 in Chapter 7 (p. 180).
(20 mks)
3.2 (20 mks each).
a)
So
Econ 450  Problem Set (Winter 2014)
#2 (1/16, due on 2/4, Tuesday)
2.1. You have $100,000 to invest in a small business. If you open the business, the probability
is .35 that you will make $300,000 (including your investment) and .65 that you will lose a
Econ 450  Problem Set (Winter 2014)
#1 (1/7, due on 1/21, Tuesday ):
The following study schedule is recommended:
(A) Complete each reading assignment by the deadline, you will be prepared for the class;
(B) Take notes carefully during lecture and review
ECONOMICS 450.02  Strategic Choice
FINAL EXAMINATION (April 26, Monday, 2010)
Time: 2 hours
Total: 100 marks
This is a closed book exam. Electronic devices (cell phones, blackberrys, electronic dictionaries,
etc) shall not be permitted during examination
Winter 2014 (updated on 12/27/2013)
Economics 450.02: Game Theory (Strategic and Cooperative Decisions)
Professor Jingang Zhao
TA: ?
810 Arts (9665217, j.zhao@usask.ca)
824 Arts (9665201)
http:/www.usask.ca/~jingang.zhao
Office Hours: TBA
Lectures: TR 8: