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Uploaded by Jorge Rojas-Vallejos

This one is a note with the solution to some problems on voting games, all-pay auctions and the classical Paper Scissors and Rock. These solutions have been worked out by me, of course, based on textbooks and papers, but anyway there could be some mistakes. This is just a reference. I hope it can be useful.

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∗

by ECON6901†

**Problem 1. Suppose there are 100 citizens and three candidates for a mayor: A, BandC,
**

and no citizen is indifferent between any two of them. Each citizen can cast a vote for one of

the candidate, the candidate who gets the majority wins. In case there is a tie for the first

place there is a second round. Each citizen prefers his favorite candidate winning to a tie

and prefers a tie to some other candidate winning. Show that a citizen’s only weakly domi-

nated action is a vote for her least preferred candidate. Find a Nash Equilibrium in which

some citizen does not vote for her favorite candidate, but the action she takes is not weakly

dominated.

**Problem 2. (Finding Nash Equilibria using best response functions) Find the Nash
**

Equlibria of the two-player strategic game in which each player’s set of actions is the set of

nonnegative numbers and the players’ payoff functions are u1(a1, a2) = a1(a2 − a1) and

u2(a1, a2) = a2(1 − a1 − a2).

**Problem 3. (Games with mixed strategy equlibria) Find all the mixed strategy Nash Equi-
**

libria of the strategic game in Figure 1.

L R L R

T 6,0 0,6 T 0,1 0,2

B 3,2 6,0 B 2,2 0,1

Figure 1.

**Problem 4. (A coordination game, solve for the case of c < 1) Two people can perform a
**

task if, and only if, they both exert effort. They are both better off if they both exert effort

and perform the task than if neither exerts effort (and nothing is accomplished); the worst

outcome for each person is that she exerts effort and the other person does not (in which

case again nothing is accomplished). Specifically, the players’ preferences are represented by

the expected value of the payoff functions in Figure 2, where c is a positive number less than

1 that can be interpreted as the cost of exerting effort. Find all the mixed strategy Nash

equilibria of this game. How do the equilibria change as c increases? Explain the reasons for

the changes.

No effort Effort

No effort 0, 0 0, − c

Effort − c, 0 1 − c, 1 − c

Figure 2.

**Problem 5. Consider an all pay auction with two bidders who value the object at 2 and 1
**

respectively. Find the mixed strategy equilibrium in this setting.

∗. This document has been written using the GNU TEXMACS text editor (see www.texmacs.org).

†. Document transcribed by Jorge Rojas.

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Problem 6. (Silverman’s game) Each of two players chooses a positive integer. If player i’s

integer is greater than player j’s integer and less than three times this integer, then player j

pays 1 dollar to player i. If player i’s integer is at least three times player j’s integer, then

player i pays 1 dollar to player j. If the integers are equal, no payment is made. Each

player’s preferences are represented by her expected monetary payoff. Show that the game

has no Nash equilibrium in pure strategies and that the pair of mixed strategies in which

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each player chooses 1, 2 and 5 each with probability 3 is a mixed strategy Nash equilibrium.

(In fact, this pair of mixed strategies is the unique mixed strategy Nash equilibrium.) (You

cannot appeal to proposition 116.2 in Osborne because the number of actions of each player

is not finite. However, you can use the argument for the “ if ” part of this result.)

**Problem 7. (Rock, Paper, Scissors) Each of two players simultaneously announces either
**

Rock , or Paper , or Scissors. Paper beats (wraps) Rock , Rock beats (blunts) Scissors, and

Scissors beats (cuts) Paper . The player who names the winning object receives 1 dollar

from her opponent; if both players make the same choice, then no payment is made. Each

player’s preferences are represented by the expected amount of money she receives. (An

example of the variant of Hotelling’s model of electoral competition considered in Exercise

75.3 has the same payoff structure. Suppose there are three possible positions, A, B, and C,

and three citizens, one of whom prefers A to B to C, one of whom prefers B to C to A, and

one of whom prefers C to A to B. Two candidates choose different positions, each citizen

votes for the candidate whose position she prefers; if both candidates choose the same posi-

tion, they tie for first place.)

**a) Formulate this situation as a strategid game and find all its mixed strategy equilibria
**

(give both the equilibrium strategies and the equilibrium payoffs).

**b) Find all the mixed strategy equilibria of the modified game in which player 1 is pro-
**

hibited from announcing Scissors.

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