Scribd
Upload
244 views

Problem1 PDF

This document outlines 6 problems related to game theory for a class. Problem 1 asks to define 5 matrix games with different numbers of Nash equilibria. Problem 2 defines a 2x2 game and asks to set parameters such that it represents a Prisoner's Dilemma. Problem 3 defines a strategic voting game and asks to analyze Nash equilibria. Problem 4 defines a game where 2 countries set tariffs and asks to analyze best responses and Nash equilibria. Problems 5 and 6 define additional games and ask to find pure and mixed strategy best responses and Nash equilibria.

Uploaded by

Cami Arce Derpić
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
244 views

Problem1 PDF

This document outlines 6 problems related to game theory for a class. Problem 1 asks to define 5 matrix games with different numbers of Nash equilibria. Problem 2 defines a 2x2 game and asks to set parameters such that it represents a Prisoner's Dilemma. Problem 3 defines a strategic voting game and asks to analyze Nash equilibria. Problem 4 defines a game where 2 countries set tariffs and asks to analyze best responses and Nash equilibria. Problems 5 and 6 define additional games and ask to find pure and mixed strategy best responses and Nash equilibria.

Uploaded by

Cami Arce Derpić
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Problem Set 1

Game Theory, Fall 2016


Due by 10:40am on October 28th.
1. (Make Games)
Write down ve 2x2 matrix games, where the ve games have 0, 1, 2, 3 and 4 purestrategy Nash equilibria, respectively. Do not use the numerical examples which are
discussed in the class or the textbook. (You do not need to provide any story of each
game. Just show the payo matrix.)
2. (Make Prisoners Dilemma)
Consider the following game. Find one combination of parameter values (a; b and c are

Player 1 Q
F

Player
q
120; 120
a; b

2
f
b; a
c; c

the parameters in this game) such that the above game has the same implications as
a prisoners dilemma. That is, both players would be better o if they played (Q; q),
but if each player acts in his own self-interest, the outcome is (F; f ), which is worse
for both of them.
3. (Strategic Voting)
Suppose that there are three candidates, X, Y and Z. The candidates have no action
(i.e., the candidates are not the players) in this game. Suppose that there are ve
voters (A; B; C; D; E) as the players of this game. Simultaneously and independently,
ve voters select single candidates.
The candidate who obtains the most votes wins the election, and if two candidates
have the same vote share, the probability of winning is 50% for each. The preferences
of ve voters are as follows.
Voter A: X

Voter B: X

Voter C: Y

Voter D: Y

Z
1

Voter E: Z

Specically, assume that the voters utility is 2 if her most preferred candidate wins,
1 if her second preferred candidate wins, and 0 if her least preferred candidate wins.
For example, Voter A gets 2 if Candidate X wins, 1 if Candidate Y wins, and 0 if
Candidate Z wins.
(a) Show that the strategy prole (X; X; Y; Y; Z) is NOT a Nash equilibrium. The
strategy proles (X; X; Y; Y; Z) means that each player votes for her most preferred candidate, i.e., voters A and B vote for X, voters C and D vote for Y , and
voter E votes for Z. (In this case, candidate X wins with probability 50%, and
Y wins with remaining probability 50%.)
(b) Show that the strategy prole (Z; Z; Z; Z; X) is a Nash equilibrium. The strategy
proles (Z; Z; Z; Z; X) means that each player votes for her least preferred candidate, i.e., voters A; B; C and D vote for Z, and voter E votes for X. (In this
case, candidate Z wins for sure. It may seem to be a strange outcome, but it is
a Nash equilibrium!)
(c) Find one pure-strategy prole which is a Nash equilibrium such that Candidate
Y wins. Prove that your pure-strategy prole is actually a Nash equilibrium.
4. (Tari Setting By Two Countries)
Suppose there are two countries that are labeled 1 and 2. Let xi be the tari level
of country i (in percent), for i = 1; 2. If country i picks xi and the other country (j)
selects xj , then country i gets a payo of 2000 + 60xi + xi xj x2i 90xj (measures in
billions of dollars). Assume that x1 and x2 must be between 0 and 100 and that the
countries set tari levels simultaneously and independently (i.e. it is a normal-form
game).
(a) Find the best response correspondences for the countries.
(b) Compute the Nash equilibrium.
(c) Show that the countries would be better o if they made a binding agreement to
set lower taris, x1 = x2 = 0.
5. (Mixed Strategies)
Suppose the following game.

Player 1

Up
Down

Player 2
Lef t
Right
0; 0
x 5; 10
10; 20
15; 15

For the following three cases, derive the best response correspondence for each player,
and nd all Nash equilibria. You are required to show both pure-strategy and mixedstrategy best responses and Nash equilibria if any. Show your work. (Do not write
only answers.)
2

(a) where x < 20.


(b) where x = 20.
(c) where x > 20.
6. (Public Good Contributions)
Three players live in a town, and each can choose to contribute to fund a streetlamp.
The utility (value) of having the streetlamp is 4 for each player, and the utility of not
having it is 0. The mayor asks each player to contribute either 2 or nothing. They will
make a decision, contribute or not, simultaneously and independently. If at least two
players contribute then the lamp will be erected. If one player or no players contribute
then the lamp will not be erected, in which case any person who contributed will not
get his money back.
(a) Find all of the pure-strategy Nash equilibrium. Explain the reason. Note that to
derive Nash equilibrium, you must also show pure-strategy best response correspondence of each player. (Hint: There exist two pure-strategy equilibria.)
(b) In this game, there is a mixed-strategy Nash equilibrium in which each player
contribute 2 with probability p. (The probability p is the same for all players.)
Calculate p. Show your work.

You might also like