Econ 711

January 16
Peter Norman

Assignment 1

1. Consider the following one-player extensive form game. Alice is driving on a highway from King of Prussia
towards Philadelphia. There are only two exits before the road ends. The …rst exit is North Philadelphia.
If Alice exits there she is mugged and get a payo¤ of 10: The next exit is Center City. If Alice exits there
she goes to the Museum of Modern Art, runs like Rocky and gets a payo¤ of 10: Finally, if Alice doesn’t
exit either in North Philadelphia or Center City, she ends up in South Philadelphia where she is mugged
and gets a payo¤ of 5 (before being mugged she can at least get a cheese steak at Pat’s): However, due
to constant texting while driving, Alice can’t distinguish the North Philadelphia exit from the Center City
exit.

1. Sketch the extensive form. Does it violate the formal de…nition of perfect recall? Does it violate any
other part of the de…nition of an extensive form game.
2. What pure strategies are available to Alice?
3. Suppose Alice can randomize. What is the best randomization?

2. In the following normal form games, …nd the best response correspondences, draw them and …nd all (pure
and mixed ) Nash equilibria.

1. Chicken
Straight Swerve
Straight 0,0 4,1
Swerve 1,4 3,3
2. Coordination
Elaines Lantern
Elaines 10,10 0,0
Lantern 0,0 10,10
3. Stag Hunt
Stag Hare
Stage 2,2 0,1
Hare 1,0 1,1
4. Matching Pennies
Head Tail
Head 1,-1 -1,1
Tail 1,1 1,-1
5. Battle of the Sexes
Opera Football
Opera 3,1 0,0
Football 0,0 1,3
 6. 3 player voting game with 3 alterantives

Chris Chris
A B
Bob Bob
A B C A B C
A 2; 0; 1 2; 0; 1 2; 0; 1 A 2; 0; 1 1; 2; 0 2; 0; 1
Alice Alice
B 2; 0; 1 1; 2; 0 2; 0; 1 B 1; 2; 0 1; 2; 0 1; 2; 0
C 2; 0; 1 2; 0; 1 0; 1; 2 C 2; 0; 1 1; 2; 0 0; 1; 2
Chris
C
Bob
A B C
A 2; 0; 1 2; 0; 1 0; 1; 2
Alice
B 2; 0; 1 1; 2; 0 0; 1; 2
C 0; 1; 2 0; 1; 2 0; 1; 2

3. Consider the following Normal form game. There are two players who assigns value 1 to an indivisible
object. The object is auctioned o¤ using an all pay auction, meaning that the players pay their bids
regardless of whether they win or loose. Hence, the payo¤ for player i is
8
< 1 bi if bi > bj
1 bi
ui (bi ; bj ) = 2 if bi = bj :
:
bi if bi < bj

Find all Nash equilibria of the game.

4. Consider the Rock/Scissors/Paper game,

r s p
R 0; 0 1; 1 1; 1
:
S 1; 1 0; 0 1; 1
P 1; 1 1; 1 0; 0

1. Find all pure and mixed Nash equilibria.

2. Consider instead the case where the row player likes to play “Rock” because it sounds more manly
than “Scissors” or “Paper”. Speci…cally, the payo¤s are

r s p
1 3 1
R 2; 0 2; 1 2; 1 :
S 1; 1 0; 0 1; 1
P 1; 1 1; 1 0; 0

Find all Nash equilibria.

5. Consider the game

L R
T 3; 0 0; 1
:
M 1; 1 1; 0
B 0; 1 3; 1
Recall the de…nition of strict dominance:

De…nition 1. s0i is strictly dominated by (the possibly mixed strategy) i if there ui (s0i ; s i ) < ui ( i ; s i )
for every s i in S i

1. Find all strictly dominated strategies.

2. Find all (pure and mixed) Nash equilibria.
3. Do the same exercise for the game

r s p v
1
R 0; 0 1; 1 1; 1 0; 10
1
S 1; 1 0; 0 1; 1 0; 10
1
P 1; 1 1; 1 0; 0 0; 10
1 1 1 1 1
D 10 ; 0 10 ; 0 10 ; 0 10 ; 10