ECON 402 Summer 2006 Assignment 2 - KEY 1. Suppose B = 100, py = 1 and px falls from 1 to 0.25. If 1 u = 2x x2 + y 2 Compute CV and EV. What do you notice? Why does this happen? Answer: First nd x and
Solutions to Chapter 10 Exercises
S3.
(a)
See the game tree below. The subgame-perfect equilibrium is (Harsh, Always be
mischievous) for payoffs of (2, 2) to the Nanny and the Kids.
(b)
The Kids natur
Consider a population consisting of n objects. If we take a sample of size m
from this population (without replacement), then there are nCm (read
"n Choose m") possible samples we can take. Now, suppo
f MlXEDSTRATEGYNASH EQUILIBRIUM
eeall that some games do not have a Nash equilibrium. Consider, fol- Bx-
ample. the matching pennies game shown in Figure 9.2. In [1118 game, no
strategy prole is sta