EXERCISES 1. Consider the following normal-form game. (a) Determine the set of rationalizable strategies for this game. 128Exercises ‘The game has only one Nash equilibrium, and it is a my. © cum. Compute this equilibrium, 1S * Mixed-stategy Nach se you know the following about a particular AAB.Ch Sz = (X, ¥,Z), wi (A,X) = 6, (A, Y) Sai, fame: = addition, suppose you know that the game has a mixed-strate a Ne . In rium in which (a) the Players select each of their Strategies with positi equilib- ability, (b) player 1's expected payoff in equilibrium is 4, and © ly ape expected payoff in equilibrium is 6. Do you have enough information 2’ culate the probability that player 2 selects X in equilibrium? If so, what om probability? , What is this 2. . Consider another version of the lobbying game introduced in this ch: 3 pose the payoffs are the same as presented earlier, except in the stan fim X lobbies and firm Y does not lobby. In this case, suppose the govnar ment’s decision yields x to firm X and zero to firm Y. Assume that x > 25. The normal form of this game is pictured here. : (a) Designate the (pure-strategy) Nash equilibria of this game (if it has any). (b) Compute the mixed-strategy Nash equilibrium of the game. (©) Given the mixed-strategy equilibrium computed in part (b), what is the probability that the government makes a decision that favors firm X? (It is the probability that (L, N) occurs.) (a) As x rises, does the probability that the government makes a decision favoring firm X rise or fall? Is this good from an economic standpoint? 4. Compute the mixed-strategy equilibria of the following games. 12914: Mined-Strategy Nash Equilibrium 5, This exercise explores how, in a mixed-strategy equilibrium positive probability only on best responses. Consider the um, Dae . the fog, me figure. rategy and mixed-strategy Nash equilibria for th; pend on x. In particular, what is the differe is game ne bene Compute the pure-sti between and note how they de y> lands ¢. (a) Find the symmetric Nash equilibrium of this n-player normal-form game. (Hint: The equilibrium is in mixed strategies. In your analysis, let p be the Probability that a person does not call for help.) — °The social situation described here was featured in A. M, Rosenthal, Thiry-Eight Winesses (New York: McGraw-Hill, 1964) and in J. Darley and B. Latané, “Bystander Intervention in Emergencies: Diffusion of Responsibility” Jounal of Personality and Social Psychology 8(1968)'377-383. 131h Equilibrium Mixed-strategy Nast 1" tat Ieast one person calls for help in egy; robability tat at ea " : i (b) Compute ine foal) that the injured pedestrian gets medical atm rium. Te depends on "- Is this a perverse OF intuitive result? \) Note how this : ¢ has a Nash equilibrium (in cither pure of mit dering the following general game and break (a) one of the pure-strategy profiles is a New re-strategy profiles is a Nash equilibrium, . 9, prove that every 2% 2 BE . Provegis). Do ths By cons the analysis into two categories: equilibrium, and (b) none of the pu 10. Does the rock-paper-scissors game have any pure-strategy Nash equilibria? Find and report all of the mixed-strategy Nash equilibria of this game. (Take an educated guess to find one, verify it mathematically, and then search for others.) f this game, refresh your memory by looking If you forget the representation of at Exercise 4 of Chapter 2 and Exercise 5 of Chapter 6. The famous British spy 001 has to choose one of four routes, a, b,c, or d (listed in order of speed in good conditions) to ski down a mountain. Fast routes are more likely to be struck by an avalanche. At the same time, the notorious rival spy 002 has to choose whether to use (y) or not to use (x) his valuable explosive device to cause an avalanche. The payoffs of this game are represented here. (a) Let 4, 2(X) denote the probability that.001 believes 002 selects x. Expl" what 00) i ‘at 001 should do if @(x) > 2/3. if O3(x) < 2/3, and if 63(x) = 2/3- 132B Exercises, (b) Imagine that you are Mr. Cue, the erudite technical advisor to British mi (b) Imagin ish mil- itary intelligence. Are there any routes you would advi itely take? Explain your answer. ise O01 definitely not vo (©) A viewer of this epic drama is trying to determine what will ha a Nash equilibrium in which one player plays a pure strategy 5 iar nese player plays a mixed strategy a). Find a different mixed-strategy equilibrium in which this same pure strategy s; is assigned zero probability. Are there an other equilibria? : Consider a game with n players, Simultaneously and independent choose between X and Y. That is, the strategy space foreach ae nee {X.Y}. The payoff of each player who selects X is 2m, — m? +3, where m is the number of players who choose X. The payoff of each player who selects Y is 4 — m,, where my, is the number of players who choose Y. Note that my + my =n (a) For the case of n = 2, represent this game in the normal form and find the pure-strategy Nash equilibria (if any). (b) Suppose that n = 3, How many Nash equilibria does this game have? (Note: you are looking for pure-strategy equilibria here.) If your answer is more than zero, describe a Nash equilibrium. (c) Continue to assume that n = 3. Determine whether this game has a sym- metric mixed-strategy Nash equilibrium in which each player selects X with probability p. If you can find such an equilibrium, what is p? 133