Homework

Ilie Mihai, IA 2
The pair of strategies (s ∗ , t∗ ) is called an equilibrium point, if and only if u1(s, t∗ ) ≤ u1(s ∗ ,
t∗ ) for each s ∈ S and u2(s ∗ , t) ≤ u2(s ∗ , t∗ ) for each t ∈ T.

That is, we can easily verify that if (s ∗ , t∗ ) = (si , tj ) is an equilibrium point, then
• aij is the maximum in the column j of the matrix A : aij = max 1≤k≤m akj
• bij is the maximum in the row i of the matrix B : bij = max 1≤k≤n bik

In our case, the bimatrix of the game is

X Y Z
S 5,2 10,6 25,10
T 10,12 5,6 0,0

a11 = 5, b11=2
a12 = 10, b12 = 6
a13 = 25, b13 = 10
a21 = 16, b21 = 12
a22 = 5, b22 = 6
a23 = 0, b23 = 0

a) The two pure Nash equilibria are (T,X) and (S,Z)

The reason for that is that:

a13 = 25 is the maximum value on column 3 and b13 = 10 is the maximum on row 1.
a21 = 10 is the maximum on column 1 and b12 = 12 is the maximum on row 2.

b) The unique and strict mixed strategy for Tom that can make Jack indiferent between each of his
pure strategie is to play S with probability 0.6 and T with probabil 0.4. With these probabilites, each
of Jack’s pure strategies has the same expected payoff:
Jack’s payoff for X : 0.6(2) + 0.4(12) = 6
Jack’s payoff for Y : 0.6(6) + 0.4(6) = 6
Jack’s payoff for Z : 0.6(10)+0.4(0) = 6

c) When X is played with probability 0.7, Jack’s total probability for the remaining two actions
must sum to 0.3. The unique (strictly) mixed strategies for Jack that make Tom indiferent between
each of his pure strategies (assuming X is played with probability 0.7) is to play with probability 0.2
and Z with probability 0.1. With these probabilities , each of Tom’s pure strategies has the same
expected payoff:

Tom’s payoff for S: 0.7(5) + 0.2(10) + 0.1(25) = 8

Tom’s payoff for T : 0.7(10) + 0.2(5) + 0.1(0) = 8

d) If we swap Tom’s payoffs for S (5) and T (10) when Jack plays X, his payoff for (S, X) becomes
10 and his payoff for (T, X) becomes 5. Then S would give Izzy a higher payoff than T no matter
what action Jack plays. Since S would be dominant strategy for Izzy if we give such a swap.