5. Consider the following game in which Nature (N) chooses the Player 1's type as Tough (T) with probability p and Weak (W) with probability 1 p. Player 1 observes his type and chooses Fight (F) or Not Fight (NF). Player 2 observes the actions of the Player 1 but not his type, and chooses Yield (Y) or Not Yield (NY). When T F NF Y NY 3,1 1,0 2,1 0,0 When W
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- 2. Consider the following Bayesian game with two players. Both players move simultaneously and player 1 can choose either H or L, while player 2's options are G, M, and D. With probability 1/2 the payoffs are given by "Game 1" : GMD H 1,2 1,0 1,3 L 2,4 0,0 0,5 and with probability 1/2 the payoffs are according to "Game 2" : G |M|D H 1,2 1,3 1,0 L 2,4 0,5 0,0 (a) Find the Nash Equilibria when neither player knows which game is actually played. (b) Assume now that player 2 knows which one among the two games is actually being played. Check that the game has a unique Bayesian Nash Equilibrium.Exercise 6.8. Consider the following extensive-form game with cardinal payoffs: 1 R O player pay 000 2 1 M 3 b 010 O player 3's payoff 1 2 221 2 000 0 0 (a) Find all the pure-strategy Nash equilibria. Which ones are also subgame perfect? (b) [This is a more challenging question] Prove that there is no mixed-strategy Nash equilibrium where Player 1 plays Mwith probability strictly between 0 and 1.A st SW B st 2,1 5, 15 2. Consider the game of chicken above. SW 11,4 3,5 a. Find all Nash equilibrium in pure strategies. b. Say that player A uses a mixed strategy, where she picks st with prob. 0.55 and sw with prob. 0.45. What is B's expected payoffs from choosing pure st and pure sw? c. Player B uses a mixed strategy and wants A to choose sw. What is the minimum prob. p, for which B needs to play st so A will choose sw.
- 1. Use the following game tree to answer parts a & b. At a chance node (Nature's turn) or when a player is indifferent between strategies, each branch has equal likelihood (50% chance they take either path). Nature receives no payoff. Assume players are mistake proof. Use a complete strategy when discussing the results of this game and provide a payoff, even if that payoff is an expected one. Recall that an expected payoff is the "average" payoff: for example if with 50% chance we receive a payoff of 5 and with 50% chance we receive a payoff of 2, the expected payoff is .5 x 5+ .5 x 2 = 3.5 a. What is the outcome of the game? Assume players are risk neutral (i.e., they see no difference in getting a payoff of 5 vs an expected payoff of 5). Red 0, 1, 3, 3 3, 2, 3, 2 Dorothy Blue Top 1, 4, 3, 2 Scarecrow 50% Green Nature Right Bottom 0, 2, 3, 1 Lion 50% 1, 3, 4, 2 3, 4, 3, 2 50% Left Nature 3, 2, 1, 2 Up 50% Red. 1, 3, 4, 2 Down Tinman Blue 0, 3, 3, 3 Yellow Dorothy 4, 3, 4, 2…8.1 Consider the following game: Player 1 A B C D 7,6 5,8 0,0 Player 2 E 5,8 7,6 1.1 E 0,0 1,1 a. Find the pure-strategy Nash equilibria (if any). b. Find the mixed-strategy Nash equilibrium in which each player randomizes over just the first two actions. c. Compute players' expected payoffs in the equilibria found in parts (a) and (b). d. Draw the extensive form for this game..3. Repeated Game Consider the game in which the stage game depicted below is infinitely repeated and in which both players discount future payoffs with discount factor 6 € [0, 1]. Player 1 E S Player 2 E 3,3 4, -1 S -1.4 1,1 (a) Suppose that both players play the tit-for-tat strategy. This strategy is characterized by exerting effort (playing E) in the first round. Then in future rounds, a player copies the action chosen by his opponent in the previous period (i.e if Player 2 shirks (plays S) in period 2, then Player 1 plays S in period 3). Then, for what values of d can tit-for-tat be supported on the equilibrium path of play? (b) Suppose that both players play the perfect tit-for-tat strategy. This strategy is characterized by exerting effort (playing E) in the first round. Then in future rounds, a player plays E unless the actions are disagreed in the previous period. Then, for what values of d can perfect tit-for-tat be supported on the equilibrium path of play?
- 3:51 9 M 23 The mixed strategy Nash equilibrium of the following * game is Player 2 R. L Player 1 U 2,2 3,1 D 3.-1 0.0 U with 3/4 probability and D with 1/4 probability for player 1; L with1/2 probability and probability for player 2 with 1/2 U with 1/2 probability and D with 1/2 probability for player 1; L with1/4 probability and R with 3/4 probability for player 2 U with 1/4 probability and D with 3/4 probability for player 1; L with1/2 probability and R with 1/2 probability for player 2 O None of the above. U with 1/2 probability and D with 1/2 probability for player 1; L with3/4 probability and R with 1/4 probability for player 21\2 U D L 4,3 0,0 R 0,0 2,1 C 1,4 0,0 Q. Suppose players 1 and 2 play the stage game depicted above. Check whether each of these strategies constitute a SPE? 1. Play U,C in Rounds 1 and 2 2. Play D,R in rounds 1 and 2 each 3. Play U,L in Round 1 followed by U,C in Round 2. If Player 2 defects punish by playing D,R in round 2. 4. Alternate between U,C and D,R in Rounds 1 and 23. Consider the game below. С1 C2 C3 R1 1, 1 4, 6 8, 5 1, 2 5, 4 R2 R3 2, 6 2, 7 7, 6 0, 7 3.1. Does the game have any pure strategy NEs? 3.2. Check whether a mixed strategy NE exists in which A is mixing R1 and R2 with positive probabilities, playing R3 with zero probability, while B is mixing C1 and C3 with positive probabilities while playing C2 with zero probability. [Let (p1,P2, P3) be the probabilities with which A plays (R1, R2,R3) and let (q1,92, 93) be the probabilities with which B plays (C1, C2,C3). Make use of the following NE test: m* is a NE if for every player i, u;(mị , m²¿) = u;(Si, m²¡) for every si E S¡|m¡(sji) > 0 and u¡(m¡ ,m²¡) > u¡(s¡,m;) for every si E S¡ |m¡ (s¡) = 0. Hint: Each player must be indifferent between those of her pure strategies that are used (with positive probability) in her mixed strategy, and unused strategies must not yield a payoff that is higher than the payoff a player gets with her NE (mixed) strategy.] %3D
- 2. Consider the following simultaneous move stage game. In each cell, player l's payoff is shown first. Player 2 L C R T 3, 1 0 ,0 5 , 0 Player 1 M 2, 1 I, 2 3 , 1 В 1, 0 , 1 4, 4 This game is played twice, without discounting of the second stage payoffs. Both players observe the outcome of the first stage prior to making their second stage choices. Determine whether or not (4,4) can be the first stage payoffs from a pure strategy subgame perfect Nash equilibrium. Explain your answer carefully.see image Use the following setting for questions 1-3. Consider the following static game: C R L 3,1 0,0 5,0 T M 2,1 1,2 3,1 B 1.2 0,1 4,4 Suppose this game is played for two periods. At the beginning of period 2, the players can observe the outcome from period 1. There is no discounting. 1. First, assume only pure-strategy SPNE such that either player's second period strategy DOES NOT depend on the first period outcome. How many such SPNE are in this game? (a) 1 (b) 2 (c) 3 (d) 4 (e) none 2. Consider only SPNE from the previous question. What is the maximum sum of the players' payoffs that can be achieved in the first period? (a) 0 (b) 3 (c) 4 (d) 5 (e) 8 3. Now consider all possible pure-strategy SPNE such that (B,R) is played in the first period. What must be the equilibrium outcome in the second period of such SPNE? (a) (T,L) (b) (M,C) (c) (B,R) (d) (T,R) (e) There are no such SPNE6. Players 1 and 2 are leaving the house and need to decide whether or not to bring an umbrella. They know there's a 75% chance that it will rain (thanks AccuWeather). If they don't bring an umbrella and it rains they receive a payoff of -7. If they do bring an umbrella and it rains, they receive a payoff of -4. If it doesn't rain, but they bring an umbrella they receive a payoff of -2. Finally, if it doesn't rain and they don't bring an umbrella they receive a payoff of 2. Player 1 learns the weather before they leave the house, but player 2 does not. Player 2 can, however, observe player 1s choice. (a) Represent this game in the extensive form. i. Use backwards induction to solve for the Nash equilibrium (b) Represent this game in the normal form i. Solve for the Nash equilibrium (c) Are the equilibrium strategy profiles the same in a) and b)? Explain why or why not.