EBK MICROECONOMICS
2nd Edition
ISBN: 9780134458496
Author: List
Publisher: VST
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Chapter 13, Problem 8Q
To determine
Situations where a player chooses to play mixed strategy, if dominant strategy is given.
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Consider a normal form game in which player 1 has three strategies, A1, B1, C1
and player 2 has three strategies, A2, B2, C2. Suppose that A1 is a best response to B2, B1 is a best
response to A2, A2 is a best response to B1, and B2 is a best response to A1. Do we know with
certainty whether A1 is rationalizable or not?
Game Theory
Consider the entry game with incomplete information studied in class. An incumbent politician's cost of campaigning can be high or low and the entrant does not know this cost (but the incumbent does). In class, we found two pure-strategy Bayesian Nash Equilibria in this game. Assume that the probability that the cost of campaigning is high is a parameter p, 0 < p < 1. Show that when p is large enough, there is only one pure-strategy Bayesian Nash Equilibrium. What is it? What is the intuition? How large does p have to be?
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
With what probability does player 1 play Down in the mixed strategy Nash equilibrium? (Input your
answer as a decimal to the nearest hundredth, for example: 0.14, 0.56, or 0.87).
PLAYER 1
Up
Down
PLAYER 2
Left
97,95
47, 33
Right
8,43
68,91
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