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ProblemSet2-2025-MSNE

This document is a problem set for a course on Game Theory and Mechanism Design, focusing on mixed strategy Nash equilibria (MSNE). It includes warm-up exercises, workhorse problems involving specific games, and thought-provoking questions that challenge the understanding of strategic form games. The problems require applying concepts such as convex sets, Nash equilibrium conditions, and utility functions to various game scenarios.

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5 views

ProblemSet2-2025-MSNE

This document is a problem set for a course on Game Theory and Mechanism Design, focusing on mixed strategy Nash equilibria (MSNE). It includes warm-up exercises, workhorse problems involving specific games, and thought-provoking questions that challenge the understanding of strategic form games. The problems require applying concepts such as convex sets, Nash equilibrium conditions, and utility functions to various game scenarios.

Uploaded by

rppay777
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Game Theory and Mechanism Design

Y. Narahari

Problem Set 2 - Jan 22, 2025

Practice Problems: MSNE

Problem Set 2
Warm-up

1. Let S be any finite set with n elements. Show that the set ∆(S), the set of all probability
distributions over S, is a convex set.

2. Using first principles, find all MSNE of the matching pennies game.

3. Using first principles, find all MSNE of the prisoner’s dilemma game.

Workhorse
1. Find all mixed strategy Nash equilibria, applying the NASC, of the following game:
N = {1, 2}; S1 = S2 = {A, B};
U1 is 4, 0, 1, 1 for (A, A), (A, B), (B, A), and (B, B) resp.
U2 is 1, 4, 5, 1 for (A, A), (A, B), (B, A), and (B, B) resp.

2. Find all mixed strategy Nash equilibria, applying the NASC, of the following game:
N = {1, 2}; S1 = S2 = {A, B};
U1 is 2, 1, 2, 1 for (A, A), (A, B), (B, A), and (B, B) resp.
U2 is 2, 2, 1, 1 for (A, A), (A, B), (B, A), and (B, B) resp.

3. Show that any strictly dominant (mixed) strategy in a strategic form game must be a
pure strategy.

4. I claim that in the theorem that provides NASC for a strategy profile to be MSNE, I can
replace the ">=" sign in the second condition by a strict ">". Is my claim right? Prove
or disprove.

1
Thought Provoking
1. Consider a zerosum, strategic form game with N = {1, 2}; S1 = S2 = [a, b]x[a, b] where
a and b are positive real numbers such that a is strictly less than b. Essentially, each
player picks simultaneously a point in the square [a, b]x[a, b]. Define the utility function
u1 (s1 , s2 ) = −u2 (s1 , s2 ) = d(s1 , s2 ) where d(s1 , s2 ) is the Euclidean distance between
the two points. Compute all MSNE.

2. Consider the following strategic form game where the numbers a, b, c, d are real num-
bers:
N = {1, 2}; S1 = S2 = {A, B};
U1 is a, b, c, d for (A, A), (A, B), (B, A), and (B, B) resp.
U2 is a, c, b, d for (A, A), (A, B), (B, A), and (B, B) resp.
It is known that the game has a strongly dominant strategy equilibrium. Prove or dis-
prove: The above SDSE is the only possible MSNE for this game.

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