Case Western Reserve University

Department of Economics
ECON 329 - Game Theory
Spring 2015

Homework #3
Lectures 8, 9 & 10
Return in Class on Tuesday Feb 26th
Name:

Total points ____ out of 20.

1. Mixed strategy Nash equilibrium (12 points). Find all mixed strategy equilibria of the following game.
Player 2

Player 1

L (q)

R (1-q)

T (r)

2,0

-1 , 2

B (1-r)

x,3

0,2

a) Derive player 1s best response to player 2s mixed strategy (4 points).

b) Derive player 2s best response to player 1s mixed strategy (4 points).

c) What (if any) is the mixed strategy Nash equilibrium if x = 1 (2 points).

d) For which values of x there are no mixed strategy Nash equilibria (2 points).

2. Mixed strategy Nash equilibrium using Theorems 2 and 4 (8 points). This question will test your
understanding of Theorems 2 and 4. Consider the following game.

Player 1

Player 2
L(q)
R ( 1q )
3,5
2,5
2,0
4 , -3

T (r)
B ( 1r )

a) What is the pure strategy Nash equilibrium in this game? (2 points).

b) Show that there is no mixed strategy Nash equilibrium in which each player assigns positive probability to
each of her pure strategies. (3 points).

c) Check whether there is a mixed strategy Nash equilibrium in which player 1 plays pure strategy T and player
2 assigns positive probability to each of her pure strategies. If yes, find all the Nash equilibria (including mixed
strategy Nash equilibrium) satisfying these conditions. (3 points).