Pearson eText Microeconomics -- Access Card
2nd Edition
ISBN: 9780136849513
Author: Acemoglu, Daron, Laibson, David, List, John
Publisher: PEARSON
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Question
Chapter 18, Problem 8P
To determine
Equilibrium in a reverse trust game. Also, determine the difference in the process from the original trust game.
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Students have asked these similar questions
Amir and Beatrice play the following game. Amir offers an amount of money z € [0, 1] to
Beatrice. Beatrice can either accept or reject. If Beatrice accepts, then Amir receives 1 - z
dollars and Beatrice receives a dollars. If Beatrice rejects, then both receive no money. As in
the Ultimatum Game, Amir cares only about maximizing the amount of money he receives.
Beatrice, on the other hand, detests Amir, and therefore cares about the amount of money
that both receive: if Amir receives y dollars and Beatrice receives a dollars, then Beatrice's
payoff is a-ay where a > 0.
(a) Find all pure strategy Nash equilibria of the game in which the two players choose
simultaneously (thus Beatrice accepts or rejects without seeing Amir's offer).
Solution: The NE are the strategy profiles in which Beatrice rejects and Amir's offer a
satisfies 2-a(1-x) ≤0, i.e. r ≤a/(1+a).
(b) Find all subgame perfect equilibria of the sequential game in which Amir first makes the
offer and Beatrice observes the offer…
Consider the following game:
Player 1 chooses A, B, or C.
If player 1 chooses A, the game ends and
each player gets a payoff of $7.
If player 1 chooses B, then player 2 observes
their choice and plays X or Y.
If player 1 chooses B and player 2 chooses X,
the game ends. Player 1 gets a payoff of $14
and player 2 gets a payoff of $16.
If player 1 chooses B and player 2 chooses Y,
the game ends. Player 1 gets a payoff of $17
and player 2 gets a payoff of $14.
If player 1 chooses Č, then player 2 chooses
secretly to put either a $5 bill or a $20 bill into
a sealed envelope. Player 1 does not observe
his choice; rather she has two options:
Open the envelope and gets whatever bill is
inside. If she chooses this, player 2 gets
nothing.
Give the envelope back to player 2, and get
$12 for sure. If she chooses this, player 2 gets
the amount in the envelope.
Draw the game tree for this game
How many strategies does Player 1 have in
this game?
Consider a game where player A moves first, choosing between Left and Right. Then, after observing player A’s choice, player B moves next choosing between Up and Down. Which of the following is true?
This is a game where players A and B have the same number of strategies.
Player A will get a higher payoff than player B as A moves first.
This is game will only have one Nash equilibrium.
This is a game of perfect information.
Chapter 18 Solutions
Pearson eText Microeconomics -- Access Card
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