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30 views2 pages

Assign 1

assignment for math

Uploaded by

saurabhgodara02
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Game Theory - Assignment 1

Due date: August 19, 2024.

1. Consider the following game with two players {b, s}: Player b is the buyer of time from
Player s who has 1 unit of time to sell. Strategies of the players are as follows:

• b chooses a price pb ∈ {3, 4}.


• s chooses a price ps ∈ {3, 4}.

Depending on the prices (pb , ps ) chosen by the players, an amount of time q(pb , ps ) is
given by Player s to Player b:

• q(pb , ps ) = 0 if pb < ps .
• q(pb , ps ) = 1 if ps = 3 ≤ pb at a per unit price ps = 3.
• q(pb , ps ) = 2
3
if ps = 4 = pb at a per unit price pb = 4.

Utilities of players are as follows. Player s incurs a cost c ∈ [0, 4] by giving one unit of
time and Player b gets a value v ∈ [3, 5] per unit time of Player s. The per unit price
paid by b to s is the price chosen by the seller (ps ). Utilities are

ub (pb , ps ; v) = q(pb , ps )(v − ps )


us (pb , ps ; c) = q(pb , ps )(ps − c),

where ub is the utility of buyer and us is utility of seller. Answer the following.

• Show that for every v ̸= 4, Player b has a weakly dominant strategy in this game.
Specify the weakly dominant strategy. What happens at v = 4?
• Show that for c ≥ 3 and c ≤ 1, Player s has a weakly dominant strategy in this
game.
• What happens if c ∈ (1, 3) for Player s?

2. Three indivisible objects (houses) need to be assigned to three agents. Each agent
needs to be assigned a unique house. Each agent has a strict preference ordering over
the set of objects.

1
The agents play an allocation game to allocate objects. First, agent 1 goes and selects
an object from the three objects. Second, agent 2 goes and selects an object from the
remaining two objects. Finally, agent 3 gets the remaining object.

Write down the strategic form game by clearly specifying the strategies of the players.

3. An indivisible good is sold to 3 buyers. If any buyer i gets qi ∈ {0, 1} quantity of the
goods makes a payment of pi , her payoff is

qi vi − pi .

Payment pi can be positive, negative or zero (some buyers may be paid or compen-
sated).

The seller asks each buyer to place a bid. If (b1 , b2 , b3 ) are the bids of the buyers then
the highest bidder wins (with ties broken in favor of highest indexed bidder1 ). If bidder
i wins, she pays max bj . Out of this payment, the seller returns
j̸=i

1
min bj
3 j̸=i

to highest and second highest bidder and

1
max bj
3 j̸=i

to the lowest bidder.

Show that bidding their own value is a weakly dominant strategy for each bidder.

1
For instance, if buyer 1 and 2 are joint winners, buyer 1 wins the object.

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