Problem Set 6 Price discrimination and auctions
Ron Siegel
Northwestern University
Winter 2015
Due: Friday, March 6 at 3pm in the discussion session
1. Revisit our second-degree price discrimination setting from lecture 11. Let the utility
of a buyer of t

Problem Set 3 Solution Key Nash equilibrium mixed strategies.
380-2
Ron Siegel
Northwestern University
Winter 2015
1. Problem 3 on page 129 (chapter 11)
(a) The normal-form game we are analyzing is
X Y
L
L
5; 5 x
N
0; 15
N
15; 0
10; 10
This game has two N

Problem Set 2 Nash equilibrium - pure strategies
Ron Siegel
Northwestern University
Winter 2015
Due: Friday, January 23 at 3pm in the discussion session
1. Watson, chapter 9, question 1 (not part c).
2. Watson, chapter 9, question 5.
3. Watson, chapter 9,

Problem Set 2 Solution Key Nahs equilibrium.
380-2
Ron Siegel
Northwestern University
Winter 2015
1. Problem 1 on page 103 (chapter 9)
We are considering the following normal-form game:
1 2
a
b
c
w
5,2 3,4 8,4
x
6,2 2,3 8,8
y
1,1 0,1 9,2
(a) First we comp

Problem Set 1 Extensive and normal form games
Ron Siegel
Northwestern University
Winter 2015
Due: Friday, January 16 at 3pm in the discussion session
1. Watson, chapter 2, question 5.
2. Watson, chapter 3, question 2.
3. Watson, chapter 3, question 3 part

Problem Set 1 Solution Key Extensive and Normal
Form Games
380-2
Ron Siegel
Northwestern University
Winter 2015
Watson, chapter 2, question 5: Amy moves rst and chooses H or F. Then Bart
moves and chooses H or F; if he chooses H, the game ends and everyon

Problem Set 4 Solution Key Subgame Perfection.
380-2
Ron Siegel
Northwestern University
Winter 2015
1. Problem 2 on page 176 (chapter 15)
(a) This game has 3 subgames: (1) the subgame following the move W by player 1;
(2) the subgame following the move Z

Problem Set 5 Incomplete information and adverse
selection
Ron Siegel
Northwestern University
Winter 2015
Due: Friday, February 20 at 3pm in the discussion session
1. Watson, chapter 26, question 2.
2. (Information might be harmful!) Consider the followin

Problem Set 6 Solution Key Incomplete
information and adverse selection.
380-2
Ron Siegel
Northwestern University
Winter 2015
1. (a) Su ces to consider two bundles (q1 ; T1 ) and (q2 ; T2 ). Since marginal cost is 0
for q
1 and innity for q > 1;the seller

Problem Set 5 Solution Key Incomplete
information and adverse selection.
380-2
Ron Siegel
Northwestern University
Winter 2015
1. Problem 2 on page 355 (chapter 26)
(a) A strategy for player 1 is a number x1 , his contribution. A strategy for player
2 is a

Game Theory
Ordinal Preferences each strategy profile is assigned a number and which signifies
how it ranks relative to other profiles, it does not signify the intensity
Chess win > draw > loss and is indifferent among all strategies that result in the
sa