Scribd
Upload
14 views

Tutorial 3

The document discusses extensive form games and subgame perfect Nash equilibria. It provides examples of extensive form games and asks students to find subgames, normal forms, and subgame perfect equilibria. It also discusses applying subgame perfect equilibrium concepts to sequential games with multiple stages.

Uploaded by

h
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
14 views

Tutorial 3

The document discusses extensive form games and subgame perfect Nash equilibria. It provides examples of extensive form games and asks students to find subgames, normal forms, and subgame perfect equilibria. It also discusses applying subgame perfect equilibrium concepts to sequential games with multiple stages.

Uploaded by

h
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

HE3001 Tutorial 3

1. Consider the following extensive form game with two players.

(a) Highlight all the subgames in the extensive form above.

(b) Explain how you would solve for the Subgame Perfect Nash Equilibrium of the above game.

(c) Will there always be a unique SPNE? If not give an example for which there is a non-unique SPNE.

2. Considering the following sequential game. Player 1 chooses either action A or action B. Player 2, after
observing Player 1’s action, chooses either action a or action b. The payoff matrix for combinations of
actions are as follows:

Player 2
a b
Player 1 A 0,2 3,3
B 4,5 -1,3

(a) Represent the game in extensive form, highlighting all the subgames.
(b) What is the normal form representation of the game?
(c) Find the Subgame Perfect equilibrium strategies and state the SPNE outcome.

3. Let us look at the “compound” game which Victoria and Albert play from last week’s tutorial.
Recall that they play Game A (in Week 1) before Game B (in week 2), each of which is played
simultaneously in their respective weeks. Both observe perfectly the outcome in Game A, before Game B
is played.

Victoria
Clean Don’t Clean
Albert Clean 5,5 2,6 Game A in
Don’t Clean 6,2 3,3 Week 1

Victoria
BBQ Macs
BBQ 5,5 2,1 Game B in
Albert
Macs 1,2 3,3 Week 2

(a) In the extensive form of the compound game, highlight all the subgames.

Since game B is played after game A, they can actually condition their action in game B on what happens
in game A.

Consider the following strategies (for both players):

 If outcome in game A in Week 1 is (Clean, Clean), choose Korean BBQ in game B in Week 2.
 If outcome in game A in Week 1 is not (Clean, Clean), choose Macs in game B in Week 2.

(b) Do the strategies specified above for game B consist of a Nash equilibrium in each of the possible
histories of Game A?

(c) Given the strategies for game B, verify that choosing to clean in Week 1 is the best response (in terms
of total payoffs) if the other is cleaning as well. Total payoffs are just the sum of their payoffs in Games A
and B.

(d) Do you think that the following strategies for both players form a subgame perfect Nash equilibrium
of the “compound game” where the two static games are played sequentially as described above?

For both players:

In Week 1: Choose to Clean.

In Week 2:

 If outcome in game A in Week 1 is (Clean, Clean), choose Korean BBQ in game B in Week 2.
 If outcome in game A in Week 1 is not (Clean, Clean), choose Macs in game B in Week 2.
4. Consider the “Hybrid” Sequential Game where Player 1 first chooses between a coordination game and
a prisoner’s dilemma game as shown below. After that, Player 1 and 2 play the chosen game
simultaneously.
Player 2

Heads Tails
Coordination
Player 1 Heads 4,4 0,0
Game
Tails 0,0 2,2

Player 2
Cooperate Defect
Prisoner’s Dilemma
Player 1 Cooperate 6,6 2,8
Defect 8,2 3,3
Game

(a) Represent the game in extensive form, highlighting all the subgames.
(b) Give an example of a SPNE where the SPNE outcome is for Player 1 to choose the Coordination
game.
(c) Give an example of a SPNE where the SPNE outcome is for Player 1 to choose the Prisoner’s
Dilemma game.

Conceptual Questions

5. How does a Sub-Game Nash Equilibria differ from a standard Nash Equilibria?

6. True or False? A Sub-Game Nash Equilibria must always be in pure strategies.

You might also like