Scribd
Upload
9 views

Module 1 Exercises

The document contains exercises related to game theory concepts. It includes normal form and extensive form games and asks students to specify strategy sets and apply solution concepts like iterated elimination of strictly dominated strategies. It also includes a question about a simultaneous move game where players announce integers and receive payoffs based on the sums and relative values announced.

Uploaded by

saulgdm076
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
9 views

Module 1 Exercises

The document contains exercises related to game theory concepts. It includes normal form and extensive form games and asks students to specify strategy sets and apply solution concepts like iterated elimination of strictly dominated strategies. It also includes a question about a simultaneous move game where players announce integers and receive payoffs based on the sums and relative values announced.

Uploaded by

saulgdm076
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Module 1 Exercises

1. Specify the full set of pure strategies for each player the following games (Si ) and the set of pure
strategy profiles S.

A. Normal form game:

Table 1: A
Player 2
X Y Z
X (2, 2) (0, 2) (3, 1)
Player 1
Y (2, 0) (1, 1) (0, 0)
Z (1, 3) (0, 0) (1, 1)

B. Extensive-form game:

A B
2 2

C D E F
3
3, 2 6, 4
G H

3, 0 8, 5

C. Stackleberg (do Si only for this one): Suppose 2 identical firms produce a homogeneous good and
possess constant returns technology with average/marginal costs of c. Inverse market demand is
linear and given by p = 100 Q, where Q = q1 + q2 . Suppose that each firm selects qi 2 R+ , that
firm 1 selects q1 first, and that firm 2 selects q2 after observing q1 . Also, assume that all output
is sold at the market clearing price.

2. Consider the game depicted in Table 2. Specify the set of pure-strategy profiles satisfying each solution
concept. (Use mixed strategies to eliminate pure ones when necessary.)

Table 2: Problem 2
Player 2
X Y Z
X (2, 2) (0, 2) (3, 1)
Player 1
Y (2, 0) (1, 1) (0, 0)
Z (1, 3) (0, 0) (1, 1)

A. Iterated elimination of strictly dominated strategies.


B. Iterated elimination of weakly dominated strategies.
3. Each of two risk-neutral players i = 1, 2 simultaneously announces a nonnegative integer ai equal to
at most 100. If a1 + a2  100, then player i receives a payo↵ of ai . If a1 + a2 > 100 and ai < aj ,
then player i receives ai and player j receives 100 aj . If a1 + a2 > 100 and a1 = a2 then both players
receive 100 ai .
(a) If a player announces a specific value, ai , what is the highest payo↵ he can get (as a function of
ai )?
(b) Find the set A of pure strategies that are strictly dominated for each player.
(c) List the set of strategy profiles (a1 , a2 ) that give player 1 a payo↵ of 100.
(d) List the set of strategy profiles (a1 , a2 ) that give player 1 a payo↵ of 99.
(e) Specify the set, A⇤ , of strategy profiles surviving iterated elimination of strictly dominated strate-
gies.

Page 2

You might also like