EC 246: Decision & Games

Problem Set IX

Problem 1: Reconsider the Battle of the Sexes Game with asymmetric information as
presented in pages 1- 2 of Lecture Six Slides. Assume that She is She(4) with probability p
and She(7) with probability (1– p). For what values of p will the game have a unique Bayes
Nash equilibrium?

Problem 2: Reconsider the Arms Race Game with Diffuse Priors presented in Chapter 9.3 of
the Lecture Notes (page 86). Suppose that each country i knows the value of its own vi in the
interval [1, 5] and assesses that rival vj is drawn from a uniform distribution over the interval
[1, 5]. Determine that pure-strategy symmetric Bayes-Nash equilibrium of this game in
which the probability that each country escalates is the least.