C OURSE 005 : P ROBLEM S ET A1

1. For the following two player game, find all equilibria

player 2
L R C

U 0, 4 5, 6 8, 7

player 1 D 2, 9 6, 5 5, 1

Figure 1

2. Consider a game in which there is prize worth Rs 30. There are three contestants A, B and
C. Each can buy a ticket worth Rs 15 or Rs 30 or not buy a ticket at all. They make these
choices simultaneously and independently. Then, knowing the ticket purchase decisions, the
game organiser awards the prize. If not one has bought a ticket, the prize is not awarded.
Otherwise, the prize is awarded to the buyer of the highest cost ticket if there is only one
such player or is split equally between two or three if there are ties among the highest cost
ticket buyers. Show this game in strategic form. Find all pure strategy Nash equilibria.

3. Consider the following game, often referred to as the “traveler’s dilemma.” An airline loses
two identical suitcases that belong to two different travelers. The airline is liable for up to $
100 per suitcase. The airline manager, in order to obtain an honest estimate of each suitcase,
separates each traveler i in a different room and proposes the following game: “Please write
an integer xi ∈ [2, 100] in this piece of paper. As a manager, I will use the following
reimbursement rule:

• If both of you write the same estimate, x1 = x2 = x, each traveler gets x.

• If one of you writes a larger estimate, i.e., xi > xj where i 6= j, then:

– the traveler who wrote the lowest estimate (traveler j) receives xj +k, where k > 1;
and

1
 – the traveler who wrote the largest estimate (traveler i) only receives max{0, xj −
k}”

(a) Show that asymmetric strategy profiles, in which travelers submit different
estimates, cannot be sustained as Nash equilibria.

(b) Show that symmetric strategy profiles, in which both travelers submit the same
estimate, and such estimate is strictly larger than 2, cannot be sustained as
Nash equilibria.

(c) Show that the symmetric strategy profile in which both travelers submit the
same estimate (x1 , x2 ) = (2, 2) is the unique pure strategy Nash equilibrium.

(d) Does the above result still hold when the traveler writing the largest amount
receives xj − k rather than max{0, xj − k}? Intuitively, since k > 1 by
definition, a traveler can now receive a negative payoff if he submits the lowest
estimate and xj < k.

4. Army A has a single plane with which it can strike one of the three possible targets. Army
B has one anti-aircraft gun that can be assigned to to one of the targets. The value of target
k is vk with v1 > v2 > v3 > 0. Army A can destroy a target only if the target is undefended
and A attacks it. Army A wishes to maximize the value of the damage and army B wishes
to minimize it. Find all Nash equilibria of this game.

5. Two roommates each need to choose to clean their apartment, and each can choose an amount
of time ti ≥ 0 to clean. If their choices are ti and tj , then player i’s payoff is given by
[(10 − tj )ti − t2i ]. This payoff function implies that the more one roommate cleans, the less
valuable is cleaning for the other roommate.

(a) What is the best response correspondence of each player i?

(b) Which choices survive iterative elimination of strictly dominated strategies?

(c) Find Pure strategy Nash equilibrium.