Econ 227-02
Answers to HW2
U4. Use successive elimination of dominated strategies to solve the following game.
Explain the steps you followed.
Row
Up
Down
Left
4, 3
5, 0
Column
Middle
2, 7
5, 1
Right
0, 4
4, 2
For Column, Right is dominated by Middle. Wit

Econ 277-02
Answers to Homework 4
1. (Ch. 3, #U2 and U3)
For each of the following games, list all the strategies available to each player. Then
identify the rollback equilibrium outcome and the complete equilibrium strategy for each
player.
a.
Strategies

Econ 277-02
Answers to Homework 10
1. Clem is sitting at the best seat in the sports bar minding his own business when in
walks the Dark Stranger (DS). The DS would like to bully Clem to get the seat, but only
if Clem is Wimp. If Clem is Tough, DS prefers

Econ 277-02
Answers to HW5
1. Ch. 3 #S8
a. The complete game tree:
b. The game tree pruned once:
The game three pruned twice:
The complete strategies are:
Frieda's: R
Big Giant: UU
Titian: UUUR
The payoffs are 2 for Freida's, 5 for Big Giant, and 5 for Ti

Econ 277-02
Answers to Homework 13
1. Ch. 11, #U2 (in the 2nd edition, Ch. 11, #4; Donna's Deep Dish and Pierce's Pizza)
a.
Pierce's
High
Low
Donna's
High
60, 60
36, 70
Low
70, 36
50, 50
Nash equil. = Low, Low
This is a prisoner's dilemma because there is

Econ 277-02
Answers to Homework 18
Ch. 12, #S2
A group has 100 members. Each person can choose to participate or not participate in a
common project. If n of them participate in the project, then each participant derives the
benefit p(n) = n, and each of

Econ 277-02
Homework 16
Due March 29
1. Ch. 17, #U2 (2nd ed., Ch. 16 #4, problem on the Princess Beanie Baby)
Suppose that three risk-neutral bidders are interested in purchasing a Princess Beanie
Baby. The bidders (numbered 1 thought 3) have valuations o

Solution to Homework Q5 to Q7
May 1, 2012
Q5.
By Taylor expansion, we know that
e2(r)t = 1 + 2(r )t + o(t)
e
2
t
= 1 + 2 t + o(t)
e(r)t = 1 + (r )t + o(t)
e t = 1 t + o( t)
e t = 1 + t + o ( t )
Substitute all the above approximations into the numerator,

Econ 277-02
Answers to Homework 19
1. Tweety enjoys singing, but the noise alerts Sylvester to his location. If Sylvester
knows Tweetys location he can choose to attack Tweety or not. Sylvesters attack
succeeds if he is strong, but not if he is weak.
a. H

Econ 277-02
Answers to Homework 17
1. The US and the USSR are playing the brinkmanship game described in Ch. 15 but with the
pure-strategy payoffs shown below.
a. Suppose the US can engage in brinkmanship. It can take steps such that, if the USSR does
not

Econ 277-02
Answers to Homework 15
1. Cuba and Java are playing the game in Figure 4 of the Dye and Sicotte article. For
concreteness, assume the payoffs are
A
E
R
Cuba
5
0
25
Java
0
5
20
a. For what values of q and will Java decide to renegotiate? (Effec

Econ 277-02
Answers to HW14
Ch. 15, #S1
a. The game tree looks like this:
A profitable company will concede and an unprofitable company will defy the union's
threat. The union gets an expected payoff of p(100) + (1p)(50) = 50 150p, so it is
only willing t

Econ 277-02
Answers to Homework 12
All of the problems for this assignment will use the following prisoners dilemma game.
Tom
Cooperate
Defect
Jerry
Cooperate
Defect
50, 50
20, 90
90, 20
0, 0
1. What is the Nash equilibrium of the one-shot game?
Both Tom

Econ 277-02
Answers to Homework 9
Ch. 8, #S5
Consider the following game:
Karl
Groucho
Harpo
Chico
Zeppo
Gummo
Ollistan
Laurel
Hardy
9
2
7
5
5
6
4
9
1
8
a. On a single graph, plot the expected payoffs from each of Karls strategies as a function of
Ollista

Econ 277-02
Answers to Homework 8
Using the corrected game:
1. In this problem we will find the mixed-strategy equilibrium for the Chicken game.
James
Swerve
Swerve
Straight
Dean
Straight
0, 0
1, 1
1, 1
10, 10
a. Find Jamess payoff for each strategy as a

Econ 277-02
Answers to Homework 7
1. Does the Battle of the Sexes game have a first-mover advantage, a second-mover
advantage, or neither? Show the game tree and indentify the rollback equilibrium if
Player 1 goes first, and if Player 2 goes first.
Andy
B

Econ 277-02
Answers to Homework 6
1. This is a two-round ultimatum game. In the first round there is $20 available to be split.
Player 1 makes an offer, and Player 2 can accept or reject the offer. If Player 2 rejects, there is
a second round in which the