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    The document discusses game theory concepts: 1) It asks about the pure strategy Nash equilibrium in a game and whether it is unique. The answer shows that solving the best response functions simultaneously yields a unique Nash equilibrium where both players choose 1. 2) It then asks what levels the players would choose if they could sign a binding agreement. The answer states that both players would be better off choosing not to spend any money on negative campaigns, as this would give each a payoff of zero rather than the Nash equilibrium payoff of -1. 3) This is described as a variant of the Prisoner's Dilemma game where cooperation yields better outcomes than defection even though defection is the dominant

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    The document discusses game theory concepts: 1) It asks about the pure strategy Nash equilibrium in a game and whether it is unique. The answer shows that solving the best response functions simultaneously yields a unique Nash equilibrium where both players choose 1. 2) It then asks what levels the players would choose if they could sign a binding agreement. The answer states that both players would be better off choosing not to spend any money on negative campaigns, as this would give each a payoff of zero rather than the Nash equilibrium payoff of -1. 3) This is described as a variant of the Prisoner's Dilemma game where cooperation yields better outcomes than defection even though defection is the dominant

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    19 views1 page

    Search For Courses, Books or Documents: Upload Download

    Uploaded by

    debmatra
    The document discusses game theory concepts: 1) It asks about the pure strategy Nash equilibrium in a game and whether it is unique. The answer shows that solving the best response functions simultaneously yields a unique Nash equilibrium where both players choose 1. 2) It then asks what levels the players would choose if they could sign a binding agreement. The answer states that both players would be better off choosing not to spend any money on negative campaigns, as this would give each a payoff of zero rather than the Nash equilibrium payoff of -1. 3) This is described as a variant of the Prisoner's Dilemma game where cooperation yields better outcomes than defection even though defection is the dominant

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    ¥

    (c) What is the pure strategy Nash equilibrium


    equilibrium?
    ? is it unique?

    Answ
    Ans wer: Solving the two best response functions sim
    simultaneously
    ultaneously,,

    1 + 2 1 + 1
    1 = and 2 =
    2 2
    yields th
    the
    e Na
    Nash
    sh equilibrium 1 =  2 = 1, and this is th
    the
    e un
    unique
    ique solu
    solution
    tion
    to these equation
    equations
    s implying that this is the unique equilibr
    equilibrium.
    ium. ¥

    (d) If the parties could sign a binding agreem


    agreemen
    ent
    t on ho
    how
    w much to camp
    campaign,
    aign,

    what lev
    eve
    els would they cho
    choose?
    ose?

    Answ
    Ans wer: Bo
    Both
    th parties would be better off if they can cho
    would hoose
    ose not to
    spend
    sp end money on negativ
    negative
    e campaigns. The payoffs for each pla
    payo player
    yer from

    the Nash equilibrium solved in part (c) are (1


    (1 1) = −1 while of they
    agreed not to sp
    speend an
    anything
    ything they each woul
    ouldd obtai
    obtainn zero. This is a
    variant of the Prisoners
    Prisoners’’ Dilemma. ¥

    15.
    Help
    16 H t lli ’ P i C titi I i ti f t ti l b

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