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Fall 2018
Holmes
Dover Canterbury
Dover 2, −2 0, 0
Moriaty
Canterbury −1, 1 2, −2
Table 1: Problem 1
(1) Identify all the pure strategy Nash Equilibria in this game.
(2) Identify all the mixed strategy Nash Equilibria in this game.
(3) What’s the relationship between maximin strategies and mixed equilibrium strategies
in this game?
(4) Now we will analyze the game in the framework of levels of reasoning. Let’s call a player
who uses 1 level of reasoning an “L1 player’, and assume that an L1 player believes that
his opponent could use the two available strategies with equal probability. (Obviously,
the naive L1 players fail to take into consideration that their opponents would also
think strategically.) What would an L1 Moriaty and an L1 Holmes choose?
(5) Now consider L2 players, who believe that the opponents would reason like L1. What
would an L2 Moriaty choose? How about an L2 Holmes?
(6) L3 believes that the opponents would reason like L2. What would an L3 Moriaty
choose? How about an L3 Holmes?
(7) In the story, Moriaty went to Dover and Holmes got off the train at Canterbury. Suppose
humans reason up to 5 levels, what does this suggest about their reasoning levels?
(There could be multiple answers.)
(1) Identify all the pure strategy Nash Equilibria in this game.
(2) Identify all the mixed strategy Nash Equilibria in this game. (Hint: an action that
does not survive Strict IEDS will never be used in a Nash equilibrium with positive
probability. The same is not true for Weak Dominance.)
1
Bob
B1 B2 B3 B4
A1 6, 4 7, 3 5, 5 6, 4
A2 7, 3 3, 7 3, 6 5, 5
Ann
A3 8, 2 7, 4 3, 7 7, 8
A4 3, 7 5, 5 4, 6 5, 5
Table 2: Problem 2
Table 3: Problem 3
(1) Identify all the pure strategy Nash Equilibria in this game.
(2) Identify all the mixed strategy Nash Equilibria in this game.
(3) Given an example from Problem 2 or Problem 3 in which an action does not survive
Weak IEDS, but is used in a Nash equilibrium.
(1) Suppose n = 2. That is, there are only two registered voters in this town, Ann and
Chris. Ann supports X, and Chris supports Y. Each voter has two strategies: to vote
or not to vote. Write down this game as a matrix and solve for all pure strategy Nash
equilibria, if they exist.
Starting from part (2), let n = 4. There are four voters, Ann, Bob, Chris and David.
Ann and Bob support X. Chris and David support Y. Each voter has two strategies: to
vote (ai = 1, i = 1, 2, 3, 4) or not to vote (ai = 0). So their strategy profiles could be
represented by (a1 , a2 , a3 , a4 ).
(2) Is (1, 1, 1, 1) a Nash equilibrium? In other words, is “everyone votes” a Nash equilib-
rium? Give a brief explanation of why or why not.
(3) Is (0, 1, 1, 1) a Nash equilibrium? Give a brief explanation of why or why not.
2
(4) Is (0, 0, 1, 1) a Nash equilibrium? Give a brief explanation of why or why not.
(5) Is (0, 0, 0, 1) a Nash equilibrium? Give a brief explanation of why or why not.
(6) Is (0, 0, 0, 0) a Nash equilibrium? Give a brief explanation of why or why not.
(1) Firm 1’s payoff function u1 (x1 , x2 ) is a piecewise function. Write down u1 (x1 , x2 ) when
x2 ∈ [0, 2).
(2) Give Firm 1’s best response function BR1 (x2 ) when x2 ∈ [0, 2).
(3) Write down Firm 1’s payoff function u1 (x1 , x2 ) when x2 ∈ [2, 5].
(4) Give Firm 1’s best response function BR1 (x2 ) when x2 ∈ [2, 5].
(5) Plot BR1 (x2 ) and BR2 (x1 ) on the same diagram.