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Problem set 4

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23 views2 pages

Problem set 4

Uploaded by

Asteroid Destroyer
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Figure 1: sequential battle of sexes

Figure 2: sequential Prisoner’s Dilemma

Figure 3: sequential BOS with imperfect information

Problem 1, 2, 3
For each game above:

a) Define strategies for each player.

b) Write down the game in strategic (normal) form and find pure strategy Nash equi-
libria.

1
c) Define subgames of this game.
d) Find subgame perfect Nash equilibrium.

Problem 4
Consider the following normal form game.
Player 2
A B
A 2, 2 −2, 6
Player 1
B 6, −2 0, 0
The stage game G is as follows:
1. Find all the Nash equilibria of the game G.
2. Assume that the above stage game is played infinitely many times. After each
round, players observe the moves done by the other player. The total payoffs of
the repeated game are the discounted (with discount factor δ) sums of the payoffs
obtained in each round. Assume players play trigger strategies. For what values of
the discount factor δ is there a subgame perfect Nash equilibrium in pure strategies
in which (A, A) is played in every round?
trigger strategies are defined as follows: Player i = 1, 2 at
• t = 1 plays A;
• t > 1 plays A if (A, A) was played at t = 1, . . . , t − 1. Otherwise, play B.

Problem 5
Consider the following normal form game.
Player 2
C D
C 4, 4 0, 6
Player 1
D 6, 0 1, 1
The stage game G is as follows:
(a) Find all the Nash equilibria of the game G.
(b) Assume that the above stage game is played infinitely many times. After each
round, players observe the moves done by the other player. The total payoffs of the
repeated game are the discounted (with discount factor δ = 12 ) sums of the payoffs
obtained in each round. Consider the following strategy profile: both players play
(C, C) until nobody deviates. If somebody deviates, then, in the following period
both players play (D, D) for n periods. After n periods of punishment, both players
go back to the strategy in (i).
For what values of n does the above strategy profile constitute a subgame perfect Nash
equilibrium?

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