INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE

IIM KOZHIKODE CAMPUS, P.O, KOZHIKODE-673570

PROGRAMMES OFFICE

Course Name: _____Game Theory_____ Section:

B_____________

Roll No: ________PGP/24/435_______ Name of the Student:

Akshay Raj___________

ANSWER SCRIPT
Instructions:-
1. Write all your answers on this answer scripts only
2. Please write your name and Roll No at the appropriate place.
3. After the completion of your exam, you are required to upload answer
scripts on the appropriate link provided by the Programmes Office.
4. Before uploading the final answer script on the link, Save the answers
sheets with the following name format : Name_Roll.No_Section

Write your answer below:-

B
 INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE
IIM KOZHIKODE CAMPUS, P.O, KOZHIKODE-673570
PROGRAMMES OFFICE

In this case, as we can observe no Nash Equilibrium exists.

 INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE
IIM KOZHIKODE CAMPUS, P.O, KOZHIKODE-673570
PROGRAMMES OFFICE

In this case playing (Rock, Rock) will become the Nash equilibrium. This happens
because earlier each object had a strength and a weakness i.e. won against one and
lost against another but in this game. But in this case, Rock doesn’t have any weakness
or chance of losing. Hence, both players will play the dominant strategy by playing Rock
only. 

2.
 INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE
IIM KOZHIKODE CAMPUS, P.O, KOZHIKODE-673570
PROGRAMMES OFFICE

As we can observe there doesn’t exist a dominant strategy for either of the players as
the move made depends on other player strategy and there is no dominant strategy in
this case.

Since player B follows the strategy of staying 1/5th of the time and swerving 4/5th of the
time. 
The expected payoff for players from staying is,

E(stay) =-6*⅕+2*⅘ = ⅖
E(swerve) = -2*⅕ +⅘ = ⅖

Therefore, E(stay)= E (swerve) and hence no dominant strategy exists

3. 
 INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE
IIM KOZHIKODE CAMPUS, P.O, KOZHIKODE-673570
PROGRAMMES OFFICE

In this case, Nash equilibrium is either (Bank, bank) or (Liquor, liquor)

4.

A.
 There exist total 5 nash equilibria in this case. 
B. 
In this case, the best payoff is achieved by being nuclear so there is no incentive for a
rational player to play any other move instead of Nuclear. So whatever other player
does, being Nuclear is the dominant strategy here.
 INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE
IIM KOZHIKODE CAMPUS, P.O, KOZHIKODE-673570
PROGRAMMES OFFICE

C. 
In the case of the prisoner’s dilemma, there was an incentive to deviate from the
(Confess, confess) for a better reward ie. (Confess, deny). This made another player
worse off and hence both players played a dominant strategy of ( deny, deny). But in
such a case there is no incentive to deviate from the mentioned strategy.

5. 
a. Both parties should alternatively play opera and once and then Fights. Or even
vice versa. This leads to a tacit understanding between them. If any of the
players tries to deviate this can act as a grimmer trigger and future payoffs for
the parties would be 0.
Therefore, the alternating strategy of playing ¼ one’s preference and ¾ others gives an
equilibrium in an infinite version.
B.
Let us see player A starts with playing Opera which is his or her preference,

Expected payoff = 3 + 1*0.5 + 3*0.5^2+ 1*0.5^3

                           = 3(1+ 0.5^2+.................) + 1*0.5(1+0.5^2+.............)
                          = 4 + ⅔ = 4.667
In the case of playing opera twice which leads to a grimmer trigger
Expected payoff = 3 + 3*0.5 +0+0+................ = 4.5
Therefore, playing alternatively is more advantageous in this case too.

C. The possibility of a fair coin is 0.5. So, players can have a tacit understanding that on
coming up of head they would play opera and on tail Fight. They can do vice versa too
and hence no confusion or unfair payoffs happen in this case