1.

Answer: D
When R is chosen, U and D will give “d” which are the best response compared to M
which will give “a” for player 1

2. Answer: E
First, we eliminate row M for player 1 as this row do not have any best response for
player 1. After this, we eliminate column M for player 2. As per table below, we
choose U, R as our pure strategy Nash equilibrium
L R
U 2,1 2,3
D 1,3 3,2

3. Answer: B
P =0
A (q) B (1-q)
C 1,3 2,0 q + 2(1-q) = -q +2
D 3,1 1,2 3q + (1-q) = 2q +1

If -q + 2 > 2q +1 , q < 1/3, then p = 1 is the best response

If q > 1/3, then p= 0 is the best response
Since q= 2/3, p =0 is the best response
4. Answer: A
10−q1
p1=
2
π 1=( p ¿¿1−5)(10−2 p1 + p 2) ¿
∂ π1
=( 10−2 p 1) +( p¿¿ 1−5)(−2)=0 ¿
p1

( 20−4 p 1) =0
p1=5=c

5. Answer: A
p=10−2 q1−2q 2

π 1=( 10−2 q1−2 q 2 )( q1 )−6 q1

∂ π1
=10−2 q1−2 q 2−6=4−2 q1 −2q 2=0
q1
q 1+ q2=2

q 1=2−q2

Sub into the equation

1
q 2= (2−2+q2 )
2
q 2=0

Question 6: Answer: D
First, player 1 eliminate U as this is not the best choice for L, M or R and then player 2 will
eliminate L as this is not the best choice for M and D
M R
M 2,4 1,3
D 4,3 4,2

According to the table, (2,4) is the subgame Perfect Nash Equilibrium

Question 7: Answer: D

x ' =α 2−1=( α −1 ) ( α +1 )< 0

α must be ≥ 0∧not equal¿ 1 , so ,0 ≤ α < 1