EXERCISES 8S U2. In each of the following games, how many pure strategies (compl

Question

EXERCISES 8S U2. In each of the following games, how many pure strategies (complete plans of action) are available to each player? List all of the pure strategies for each player (b, MINERVA-a/. 3,0 MNERVAX.LBUS)- 3, 3 0,4 S ALBUS 1.0 MINERVA 2, 2 ALBUS MINERVA MINERVA ALBUS 2,4,0 SEVERUS 0, 2,3 MINERVA MINERVA 4, 1,5 ALBUS 2, 1,1 U3. For each of the games illustrated in Exercise U2, identify the rollback equi- librium outcome and the complete equilibrium strategy for each player. U4. Two distinct proposals, A and B, are being debated in Washington. The Con- gress likes proposal A, and the president likes proposal B. The proposals are not mutually exclusive; either or both or neither may become law. Thus

Explanation / Answer

ANSWER:

PART-a)

Strategies List:

Stategy Albus: N; M; S

Stategy Minerva: aaa, aab, aba, abb, baa, bab, bba, bbb

Rollback equilibrium:

Stategy Albus: N

Stategy Minerva: bab

Outcome: Albus plays N & Minerva plays b.

PART-b)

Strategies List:

Stategy Albus: NN; NS; SN; SS

Stategy Minerva: aa, ab, ba, bb, ca, cb

Rollback equilibrium:

Stategy Albus: SN

Stategy Minerva: ca

Outcome: Albus plays S & then Minerva plays a.

PART-c)

Strategies List:

Stategy Albus: NN; NS; SN; SS

Stategy Minerva: aa, ab, ba, bb

Stategy Severus: X; Y

Rollback equilibrium:

Stategy Albus: SS

Stategy Minerva: ba

Stategy Severus: Y

Outcome: Albus plays S.

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