2022-2023 ACADEMIC YEAR FALL SEMESTER “GAME THEORY” COURSE

HOMEWORK 2

1. Two generals each have three units and are preparing for an upcoming battle. Each can
choose to send any number of units to the fight or none at all. The side with more troops
wins the battle, and the fight will draw if there are equal forces. Victory is worth 1 point;
defeat is worth -1. If the sides draw or at least one side refuses to fight, both sides earn 0.

This is a “safety in numbers” game, and the following matrix represents the generals’
situation:
Zero One Two Three
Zero 0,0 0,0 0,0 0,0
One 0,0 0,0 -1 , 1 -1 , 1
Two 0,0 1 , -1 0,0 -1 , 1
Three 0,0 1 , -1 1 , -1 0,0

Find the pure strategy Nash equilibrium(s) of the given game.

è Suppose 2nd general was going to send 0 (1,2 and 3) units to the battle. What is the 1st
general’s best response?
è Suppose 2nd general was going to send 1 units to the battle. …
è Suppose 2nd general was going to send 2 units to the battle. …
è Suppose 2nd general was going to send 3 units to the battle. …

Zero One Two Three

Zero 0* , 0 0,0 0,0 0* , 0
One 0* , 0 0,0 -1 , 1 -1 , 1
Two 0* , 0 1* , -1 0,0 -1 , 1
Three 0* , 0 1* , -1 1* , -1 0* , 0

è Suppose 1st general was going to send 0 (1,2 and 3) units to the battle. What is the 2nd
general’s best response?
è Suppose 1st general was going to send 1 units to the battle. …
è Suppose 1st general was going to send 2 units to the battle. …
è Suppose 1st general was going to send 3 units to the battle. …

Zero One Two Three

Zero 0 , 0* 0 , 0* 0 , 0* 0 , 0*
One 0,0 0,0 -1 , 1* -1 , 1*
Two 0,0 1 , -1 0,0 -1 , 1*
Three 0 , 0* 1 , -1 1 , -1 0 , 0*
 è Combining all of that information together, the full game looks like this:

Zero One Two Three

Zero 0* , 0* 0 , 0* 0 , 0* 0* , 0*
One 0* , 0 0,0 -1 , 1* -1 , 1*
Two 0* , 0 1* , -1 0,0 -1 , 1*
Three 0* , 0* 1* , -1 1* , -1 0* , 0*

è To find all of the game’s pure strategy Nash equilibrium(s), we only need to check which
outcomes have asterisks next to both players’ payoffs.

Zero One Two Three

Zero 0* , 0* 0,0 0,0 0* , 0*
One 0,0 0,0 -1 , 1 -1 , 1
Two 0,0 1 , -1 0,0 -1 , 1
Three 0* , 0* 1 , -1 1 , -1 0* , 0*

There are 4 Nash equilibriums:

• (Zero, Zero) • (Three, Zero)
• (Zero, Three) • (Three, Three)
2. Consider the role of stoplights in a society. Imagine 2 cars are approaching an intersection
at 40 miles per hour from perpendicular directions. If both continue full speed, they will
crash spectacularly. But if both stop, they waste time deciding who should go through the
intersection first. Both drivers benefit if one continues without stopping while the other
momentarily brakes to allow the other to pass.
We can illustrate the drivers’ choices and preferences using the following matrix:

Go Stop
Go -5 , -5 1,0
Stop 0,1 -1 , -1

Find the pure strategy Nash equilibrium(s) of the given game.

è Suppose 2nd player chose “go”. How should 1st player respond?
è Suppose 2nd player chose “stop”. …

Go Stop
Go -5 , -5 1* , 0
Stop 0* , 1 -1 , -1

è Suppose 1st player chose “go”. How should 2nd player respond?
è Suppose 1st player chose “stop”. …

Go Stop
Go -5 , -5 1 , 0*
Stop 0 , 1* -1 , -1

è Combining all of that information together, the full game looks like this:

Go Stop
Go -5 , -5 1* , 0*
Stop 0* , 1* -1 , -1

There are 2 Nash equilibriums:

• (Stop, Go)
• (Go, Stop)

How can the players resolve their dilemma?

Stoplights provide a solution. The stoplight tells one driver to go with a green light, while it
orders the other to stop with a red light.

The players have no incentive to deviate from the stoplight’s suggestion. If the driver at the red
light goes, he causes an accident. If the driver at the green light stops, he unnecessarily wastes
some time.

Thus, the stoplight instructs the drivers to play a Nash equilibrium.

3. Find the pure strategy Nash equilibrium(s) of the below given game.

2nd player
L C R
U 4,3 5,1 6,2
st
1 player M 2,1 8,4 3,6
D 3,0 9,6 2,8

è Suppose 2nd player chose “L”. How should 1st player respond?
è Suppose 2nd player chose “C”. …
è Suppose 2nd player chose “R”. …

è Suppose 1st player chose “U”. How should 2nd player respond?
è Suppose 1st player chose “M”. …
è Suppose 1st player chose “D”. …

2nd player
L C R
U 4* , 3* 5,1 6* , 2
st
1 player M 2,1 8,4 3 , 6*
D 3,0 9* , 6 2 , 8*

There is only 1 Nash equilibrium: (U, L)

4. A tennis match played between the 2 best tennis players ever according to the rankings.
Say that, at some point in a Grand Slam match, Nadal serves and Federer returns. Nadal
has to decide whether to aim to the right or to the left, and Federer has to decide whether
to anticipate the ball coming to the right or to the left. Right and left are always defined
from the perspective of the server. It is important to understand that Federer cannot just
wait and see where the ball is coming, as its speed is so high that the time it takes to cross
the court is less than the reaction time of any human being. Thus, to all effects, the
decisions of both Nadal and Federer are simultaneous.

For instance, if Nadal serves to the left and Federer mistakenly anticipates that the ball is
going to the right, then Nadal has a great advantage to win the point. Say that in this
circumstance he wins the point 90% of the time. Also, if Nadal serves to the right and
Federer anticipates the left, then Nadal wins 70% of the time. Finally, if Federer anticipates
the side correctly, the odds of Nadal winning are 50–50.

Below table summarizes all this.

Federer
Left Right
Left 50 , 50 90 , 10
Nadal
Right 70 , 30 50 , 50

What is the best course of action for Nadal? And for Federer?

Find the Mixed Strategy Nash Equilibrium of this game.

Federer
Probabilities q 1-q
Probabilities Left Right
p Left 50 , 50 90 , 10
Nadal
1-p Right 70 , 30 50 , 50

The expected payoff for Nadal when he plays “Left” = 50q + 90(1-q) = 90-40q

The expected payoff for Nadal when he plays “Right” = 70q + 50(1-q) = 50 + 20q

The 2 expected payoffs must be the same for Nadal:

90 – 40q = 50 + 20q

60q = 40

q =2/3

This means that Federer must choose “Left” with probability 2/3.
The expected payoff for Federer when he plays “Left” = 50p + 30(1-p) = 30+20p

The expected payoff for Federer when he plays “Right” = 10p + 50(1-p) = 50-40q

The 2 expected payoffs must be the same for Federer:

30 + 20p = 50 – 40p

60p = 20

p =1/3

This means that Nadal must choose “Left” with the probability 1/3.

The fact that the pair of individual strategies (p , q)=(1/3 , 2/3) is a Nash equilibrium.

If the game is played 3 times, Nadal is expected to choose “Left” 1 time and choose “Right”
2 times; while Federer is expected to choose “Left” 2 times and choose “Right” 1 time.