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    Bharavi Kothapalli
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    This document provides the details of Problem Set 1 for an economics course. It is due on February 8th and can be completed in groups of up to four students. The problems from the Gibbons textbook include 1.2, 1.4, 1.6, 1.8, and 1.10. Two other problems are described: a Blotto game involving strategic distribution of military forces between two locations, and a Bertrand duopoly model with differing marginal costs for two firms.

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    This document provides the details of Problem Set 1 for an economics course. It is due on February 8th and can be completed in groups of up to four students. The problems from the Gibbons textbook include 1.2, 1.4, 1.6, 1.8, and 1.10. Two other problems are described: a Blotto game involving strategic distribution of military forces between two locations, and a Bertrand duopoly model with differing marginal costs for two firms.

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    Attribution Non-Commercial (BY-NC)
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    50 views1 page

    Problem Set 1

    Uploaded by

    Bharavi Kothapalli
    This document provides the details of Problem Set 1 for an economics course. It is due on February 8th and can be completed in groups of up to four students. The problems from the Gibbons textbook include 1.2, 1.4, 1.6, 1.8, and 1.10. Two other problems are described: a Blotto game involving strategic distribution of military forces between two locations, and a Bertrand duopoly model with differing marginal costs for two firms.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
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    of 1

    ECON 440/640

    Problem Set 1

    Problem Set 1
    Due February 8th. No late problems sets accepted. You may work in groups of up to four people.

    Problems from Gibbons


    1.2, 1.4, 1.6, 1.8, 1.10

    Other Problems
    A Blotto Game (From Fun and Games by Binmore, problem 6.34) Colonel Blotto has four companies that he can distribute among two locations in three different ways: (3, 1), (2, 2), and (1, 3). His opponent Count Baloney has three companies that he can distribute in two different ways: (2, 1) and (1, 2). Suppose that Blotto sends m1 companies to location 1 and Baloney sends n1 companies to location 1. If m1 = n1, the result is a stand-off and each commander gets a payoff of zero for location 1. If m1 n1, the larger force overwhelms the smaller force without loss to itself. If m1 > n1, Blotto gets a payoff of n1 and Baloney gets a payoff of -n1. If m1 < n1, Blotto gets a payoff of -m1 and Baloney gets a payoff of m1. Each players total payoff is the sum of his payoffs at both locations. Find the normal-form of this game and determine a mixed-strategy Nash equilibrium. Bertrand Duopoly Consider the homogenous goods Bertrand variant we discussed in class (Gibbonss problem 1.7 is about this model) but with differing marginal costs of production. Firm 1 pays c1 per unit produced and Firm 2 pays c2. Solve for the Nash equilibrium of this game and show that it is unique.

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