Scribd
Upload
362 views5 pages

GT Homework 1

This document is a homework assignment for a game theory class that includes 4 questions analyzing different game theory scenarios: 1) A 3x3 game that asks the student to provide the normal form, determine if it can be solved using iterated elimination of dominated strategies, and find all Nash equilibria. 2) Another 3x3 game with similar analysis questions. 3) A 2x2 game modeling a dispute between an employee and manager, asking for the normal form and to determine conditions for a strictly dominant strategy. 4) A short question asking what game best explains advertising competition between Coke and Pepsi, with options for common games like prisoner's dilemma.

Uploaded by

John Hun
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
362 views5 pages

GT Homework 1

This document is a homework assignment for a game theory class that includes 4 questions analyzing different game theory scenarios: 1) A 3x3 game that asks the student to provide the normal form, determine if it can be solved using iterated elimination of dominated strategies, and find all Nash equilibria. 2) Another 3x3 game with similar analysis questions. 3) A 2x2 game modeling a dispute between an employee and manager, asking for the normal form and to determine conditions for a strictly dominant strategy. 4) A short question asking what game best explains advertising competition between Coke and Pepsi, with options for common games like prisoner's dilemma.

Uploaded by

John Hun
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/ 5

Case Western Reserve University

Department of Economics
ECON 329 - Game Theory
Spring 2018

Homework #1

Return in Class on Feb 6th

Name: .

1
Total points ____ out of 20.

1. A simple 3x3 game (6 points). Consider the following game:

Player 2
A B C
A 2, 2 3, 1 1, 3
Player 1 B 3, 1 4, 2 0, 0
C 4, 1 2, 3 -1, 1

a) Write down the normal form representation of this game, describing the three essential elements of the game
(2 points).

b) Can this game be solved using Iterated elimination of dominated strategy (IEDS)? If so find the equilibrium
using IEDS. Explain your solution. (2 points).

c) Find all Nash equilibria of this game. Explain your solution. (2 points).

2
2. A simple 3x3 game (6 points). Consider the following game:

Player Y
L C R
T 8, 3 0, 4 4, 4
Player X M 4, 2 1, 5 5, 3
D 3, 7 0, 1 2, 0

a) Write down the normal form representation of this game, describing the three essential elements of the game
(2 points).

b) Can this game be solved using Iterated elimination of dominated strategy (IEDS)? If so find the equilibrium
using IEDS. Explain your solution. (2 points).

c) Find all Nash equilibria of this game. Explain your solution. (2 points).

3
3. Give in or attorney (6 points). Suppose that you manage a firm and are engaged in a dispute with one of
your employees. The process of dispute resolution is modeled by the following game, where your employee
chooses either to “settle” or to “be tough in negotiation,” and you choose either to “hire an attorney” or to “give
in.” In the matrix, x is a number that both you and the employee know.

Manager (You)
give in hire attorney
settle 1, 0 1, 1
Employee
be tough 3, 0 x, 1

a) Write down the normal form representation of this game (2 points).

b) Under what conditions “be tough” is a strictly dominant strategy for employee? (2 points).

c) Find all Nash equilibria of this game for any values of x. Explain your solution. (2 points).

4
4. Coke versus Pepsi (2 points). Using the concept of the Game theory explain why Coke and Pepsi are so
involved in advertising even though it is very costly and it would be better for both firms to abstain from
advertisement. Which game best explains the advertising competition between Coke and Pepsi?
(a) The battle of the sexes
(b) Chicken
(c) Prisoner’s dilemma
(d) Matching pennies
(e) Guessing game (“beauty contest”)

You might also like