May 03, 2018

EHM5240 : Game Theory and Cognition for Wireless Networks Spring 2018
Midterm 2 Sample

1. Two people are involved in a dispute. Person 1 does not know whether person 2 is strong or weak; she
assigns probability p to person 2 being strong. Person 2 is fully informed. Each person can either fight
or back up. Each persons preferences are represented by the expected value of a payoff function that
assigns the payo of 0 if she backs up (regardless of the other persons action) and a payoff of 1 if she
ghts and her opponent backs up; if both people fight then their payos are (−1, 1) if person 2 is strong
and (1, −1) if person 2 is weak.
Formulate this situation as a Bayesian game and find its Nash equilibria if
(a) p = 1/3 (12.5pts) and if
(b) p = 3/4. (12.5pts)

1
2. What should the blank entries be for the following game to make it a potential game? (25 pts)

P1 \P2 L M R
U 1,? 2,? 1,?
M ?,4 5,3 2,?
B 1,? 6,? 7,?

2
3. Consider routing traffic in a shared network. In this routing problem, there is 1 unit of divisible traffic
that needs to be routed from the start to the destination. There are two alternative links (routes) that
may carry traffic, i.e. there are two possible routing choices either the High road or the Low road.

• Each link has a congestion function which depends on the amount of traffic using that link,
cr : {0, 1, 2, · · ·}. The cost cr (k).
• Every user is selfish and wants to minimize her own total cost.

A better response is the one that simply has a lower cost compared to our current strategy. And the
equilibrium is roughly defined over best responses where everyone does not have an incentive to
deviate.

(a) The cost in the upper link depends on the amount of load it accumulates c1 (x) = 2x/3, while the
load in the lower link is a constant valued at c2 (x) = 2/3, thus congestion independent. What is
the flow allocation that minimizes the total cost for a total of 1 unit of traffic on both links? (10
pts) X
min Csystem (xS ) = ci (xSi )xSi
x1 +x2 ≤1
i

(b) Suppose there are two decision makers that each control 1/2 of the traffic. Each decision maker
only cares about the cost of the cost of his/her traffic. Model the situation as a strategic game. Is
there a pure Nash equilibrium in the above congestion game? What is the cost Ceq (xN E ) ? How
does it compare to the optimal flow allocation in (a) (10 pts)

(c) Consider a monopolist controlling both routes and setting prices to steer traffic using a markup k
such that c1 (x) = 2x/3 + k, and c2 (x) = 2/3 for some constant k. Can k be selected so that
decentralized traffic will converge to optimum flow allocation? (10 pts)

3
4. For the following game:

• R = {r1 , r2 , r3 }
• N = {1, 2}
• An anonymous welfare function for each resource r of the form Wr : {0, 1, 2} → R. The welfare
functions are:

Wr1 (0) = 0, Wr1 (1) = v1 , Wr1 (2) = 1.5 · v1 (1)

Wr2 (0) = 0, Wr2 (1) = v2 , Wr2 (2) = 1.5 · v2 (2)
Wr3 (0) = 0, Wr3 (1) = v3 , Wr3 (2) = 1.5 · v3 (3)

,where v1 , v2 , v3 ≥ 0 but unknown.

• A finite action set for each player Ai ⊆ R. An action ai ∈ Ai corresponds to just one resource
r ∈ R. Let A = A1 × A2 represent the set of joint actions.
• A system level welfare function of the form
X
W (a) = Wr (|a|r )
r∈R

where where |a|r represents the number of player that chose resource r in action profile a, i.e.

|a|r = |{j ∈ N : r ∈ aj }|

The goal of this question is to understand how available utility design methodologies improve the
efficiency of the resulting pure Nash equilibria.

(a) Consider the special case A1 = A2 = {r1 , r2 } i.e. no resource r3 for this problem. However, v1 and
v2 are unknown. Suppose each agent is assigned the marginal contribution utility. What is the
price of anarchy for the class of games induced by the set of feasible values, v1 , v2 ≥ 0. (10 pts)
(b) Consider the special case A1 = {r1 , r2 } and A2 = {r2 , r3 }; however, v1 , v2 , and v3 are unknown.
Suppose each agent is assigned the marginal contribution utility. What is the price of anarchy for
the class of games induced by the set of feasible values, v1 , v2 , v3 ≥ 0. (10 pts)
(c) Consider the special case A1 = {r1 , r2 } and A2 = {r2 , r3 }; however, v1 , v2 , and v3 are unknown.
Suppose each agent is assigned the Shapley value utility. What is the price of anarchy for the
class of games induced by the set of feasible values v1 , v2 , v3 ≥ 0. ( 10 pts)

Hint: For each scenario (a-c), try various values for v1, v2, and v3 to try and gain insight into the
structural form of the worst case situations.