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Game Theory End Sem Pyq

This document outlines the end semester examination for the subject 'Game Theory in Economics' at the National Institute of Technology, Rourkela, for the academic session 2023-2024. It includes various questions related to game theory concepts such as Nash equilibrium, Cournot competition, and strategic interactions in competitive markets. The exam consists of multiple questions requiring calculations, diagrams, and theoretical explanations.

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Divyansh Tripathi
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45 views2 pages

Game Theory End Sem Pyq

This document outlines the end semester examination for the subject 'Game Theory in Economics' at the National Institute of Technology, Rourkela, for the academic session 2023-2024. It includes various questions related to game theory concepts such as Nash equilibrium, Cournot competition, and strategic interactions in competitive markets. The exam consists of multiple questions requiring calculations, diagrams, and theoretical explanations.

Uploaded by

Divyansh Tripathi
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
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NATIONAL INSTITUTE OF TECHNOLOGY, ROURKELA

END SEMESTER EXAMINATION


ACADEMIC SESSION:2023-2024 (SPRING)

Subject code: 1350 Subject Name: Game Theory in Economics Dept. Code: HS
No. of pages: 2 Full Mark: 50 Duration: 3 Hours

Figures at the right-hand margin indicate marks.

Question Marks
No.
Answer any FIVE of the following questions.
1. Suppose the demand curves are, 10
𝑃1 = 𝑎 − 𝑏𝑞1 − 𝑑𝑞2
𝑃2 = 𝑎 − 𝑏𝑞2 − 𝑑𝑞1
where b>0 and d>0.
Suppose the per-unit cost of production for both firms is equal and c
Rupees, where a>c.
(a) Set up the best response functions for both firms and draw the
diagram.
(b) Compute Cournot Nash Equilibrium.
(c) Compute Cartel quantities.

2. Assume that both the goalie and the kicker have three strategies each. Let 10
the payoff matrix be
Kicker \ Goalie Left Middle Right
Left .4 .5 .9
Middle .5 .2 .5
Right .9 .5 .3
(a) Can you find a pure-strategy Nash equilibrium?
(b) Can you find a pure strategy that is dominated by another pure
strategy?
(c) Show that for the kicker shooting through the middle is dominated
by a mixed strategy. Is it dominated by more than one mixed
strategy?
(d) Can you find a mixed-strategy equilibrium in which the goalie stays
put with some probability? Can you find a mixed-strategy
equilibrium in which the goalie stays put for sure?
3. 1\2 L C R
U 5 8 -4 10
M -7 9 0
D 9 1 -2
(a) Compute the pure-strategy maxmin payoff of player 1.
(b) What is the minimum expected payoff if she mixes between the
strategies U and M playing the former with probability 1/2 and the
latter with probability 1/2 as well?
(c) What is the minimum expected payoff if she mixes among all three
strategies playing U, M, and D with equal probabilities of 1/3 each?
(d) Compute the maxmin payoff and the security strategy.

4. For years the bakery Ceres has been the only one in the village of Rosslare. 10
Business has been going very well. But these days may soon be over as the
Duchateau family is considering entering the bakery market in Rosslare
with its bakery Arán Blasta. If Ceres is a monopolist, its profit are equal to
100,000. If Arán Blasta enters the market and both the firms charge “high”
prices, both bakeries will earn 50,000. If, on the other hand, Ceres sets a
“cut-throat” competitive price (low price), and Arán Blasta sets the high
price, then Ceres’ profits are equal to 0 thousand, while Arán Blasta’s
profits are – 10,000, and vice versa. If both bakeries set the low price, their
profits are – 5,000.
(a) Assume first that the timing is as follows: if Arán Blasta enters then
Cerses sets its price (high or low), after which Arán Blasta sets its
price. Draw the game tree for this situation and determine the
payoffs at the final nodes. Is it a game of perfect information?
(b) Use backward induction to solve the game.

5. Distinguish between (Any two). [5+5=10]


(a) Finitely Repeated Game and Infinitely Repeated Game.
(b) Nash Equilibrium and Subgame Perfect Nash Equilibrium.
(c) Maxmin and Minmax Strategy.

6. Write short-notes on (Any two). [5+5=10]


(a) Trigger Strategy
(b) Zero-sum Game
(c) Backward Induction

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