GTA Surprise Quiz Answer

Key
There were two friends taking chemistry at Duke University. Both had done pretty well on all of the
quizzes, the labs, and the midterm, so that going into the final they each had a solid A. They were so
confident the weekend before the final that they decided to go to a party at the University of
Virginia. The party was so good that they overslept all day Sunday, and got back too late to study for
the chemistry final that was scheduled for Monday morning. Rather than take the final unprepared,
they went to the professor with a sob story. They said they each had gone up to UVA and had
planned to come back in good time to study for the final but had a flat tire on the way back. Because
they didn’t have a spare, they had spent most of the night looking for help. Now they were really too
tired, so could they please have a makeup final the next day? The professor thought it over and
agreed. The two studied all of Monday evening and came well prepared on Tuesday morning. The
professor placed them in separate rooms and handed the test to each. The first question on the first
page, worth 10 points, was very easy. Each of them wrote a good answer, and greatly relieved,
turned the page. It had just one question, worth 90 points. It was: “Which tire?”

1. Write the normal-form matrix representation of the game. 3

2. Can you apply Iterated Elimination of Strictly Dominated Strategy solution concept to solve this
game? Explain your answer. 3

3. What are the Nash equilibria of this game? 4

Answer:

1. Players: 2 PLayers P1 and P2.

Actions:

Sets S ={UR,LR,LL,UL}

UR: Upper Right Tire

LR: Lower Right Tire

LL: Lower Left Tire

UL: Upper Left Tire

Preferences: u1 and u2 are respective payoffs for P1 and P2.

● For all x and y such that x≠ y and x,y belongs to S

 u1(x,y)=u2(x,y)=10 (Assuming 10 payoff if they are caught as only 1st q
correct)

● For x belonging to set S,

u1(x,x)= u2(x,x) =100 (Assuming 100 payoff if they don’t get caught and pass the test)

Matrix Form Representation:

P2

UR LR LL UL

UR (100,100) (10,10) (10,10) (10,10)

P1 LR (10,10) (100,100) (10,10) (10,10)

LL (10,10) (10,10) (100,100) (10,10)

UL (10,10) (10,10) (10,10) (100,100)

2. IESDS can’t be applied in this situation as there is no strategy in the strategy set of any of the
players that is strictly dominated i.e. gives a lower payoff to the player independent of the
strategy chosen by the other player. Iterated elimination of strictly dominated strategies,
will eliminate only those strategies which are strictly dominated for a player and give them
worse payoff for any action of the other player.

For every choice x in set S here in this situation for P1 , x becomes the dominant strategy for
some action of P2. So all strategies x benefit P1 for some response of P2. Hence, there is no
strategy that does not benefit P2 regardless of what P2 does, so there is no strictly
dominated strategy for P1 and similarly for P2. Hence, IESDS can’t be applied as there are no
strictly dominated strategies.

3. We solve this game using B.R.(Best Response) Analysis.

P2
 UR LR LL UL

UR (100*,100*) (10,10) (10,10) (10,10)

P1 LR (10,10) (100*,100*) (10,10) (10,10)

LL (10,10) (10,10) (100*,100*) (10,10)

UL (10,10) (10,10) (10,10) (100*,100*)

Here, in this representation, we mark the best response and payoff of P2 for a particular
action of P1 in bold and the best response and payoff of P1 for a particular action of P2 along
with a *.

One can clearly see that the intersection of best responses of the two players gives us the
Nash equilibriums defined as the “best response to each other” strategy combination. Here,
according to the matrix above, we observe that there are 4 different Nash Equilibria in the
game, respectively (UR,UR);(LR,LR);(LL,LL);(UL,UL).

For any queries regarding solutions you may contact Moksh Papneja
via mail.