EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 17.5, Problem 1MQ
To determine
Extensive form of new game.
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UNIT 9 CHAPTER 5
In a gambling game, Player A and Player B both have a $1 and a $5 bill. Each player selects one of the bills without the other player knowing the bill selected. Simultaneously they both reveal the bills selected. If the bills do not match, Player A wins Player B's bill. If the bills match, Player B wins Player A's bill.
Develop the game theory table for this game. The values should be expressed as the gains (or losses) for Player A.
Is there a pure strategy? Why or why not?
Determine the optimal strategies and the value of this game. Does the game favor one player over the other?
Suppose Player B decides to deviate from the optimal strategy and begins playing each bill 50% of the time. What should Player A do to improve Player A’s winnings? Comment on why it is important to follow an optimal game theory strategy.
In 'the dictator' game, one player (the dictator) chooses how to divide a pot of $10 between herself and another player (the recipient). The recipient does not have an opportunity to reject the proposed distribution. As such, if the dictator only cares about how much money she makes, she should keep all $10 for herself and give the recipient nothing. However, when economists conduct experiments with the dictator game, they find that dictators often offer strictly positive amounts to the recipients.
Are dictators behaving irrationally in these experiments? Whether you think they are or not, your response should try to provide an explanation for the behavior.
Consider the following game
- one card is dealt to player 1 ( the sender) from a standard deck of playing cards. The card may either be red (heart or diamond) or black (spades or clubs). Player 1 observes her card, but player 2 (the receiver) does not
- Player 1 decides to Play (P) or Not Play (N). If player 1 chooses not to play, then the game ends and the player receives -1 and player 2 receives 1.
- If player 1 chooses to play, then player 2 observes this decision (but not the card) and chooses to Continue (C) or Quit (Q). If player 2 chooses Q, player 1 earns a payoff of 1 and player 2 a payoff of -1 regardless of player 1's card
- If player 2 chooses continue, player 1 reveals her card. If the card is red, player 1 receives a payoff of 3 and player 2 a payoff of -3. If the card is black, player 1 receives a payoff of 2 and player 2 a payoff of -1
a. Draw the extensive form game
b. Draw the Bayesian form game
Chapter 17 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 17.3 - Prob. 1MQCh. 17.3 - Prob. 2MQCh. 17.3 - Prob. 1.1MQCh. 17.3 - Prob. 1.2MQCh. 17.3 - Prob. 2.2MQCh. 17.3 - Prob. 1.3MQCh. 17.3 - Prob. 1TTACh. 17.3 - Prob. 2TTACh. 17.4 - Prob. 1TTACh. 17.4 - Prob. 2TTA
Ch. 17.4 - Prob. 1.1TTACh. 17.4 - Prob. 2.1TTACh. 17.4 - Prob. 1MQCh. 17.4 - Prob. 1.2TTACh. 17.4 - Prob. 2.2TTACh. 17.5 - Prob. 1MQCh. 17.5 - Prob. 2MQCh. 17.6 - Prob. 1TTACh. 17.6 - Prob. 2TTACh. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQCh. 17 - Prob. 17.1PCh. 17 - Prob. 17.2PCh. 17 - Prob. 17.3PCh. 17 - Prob. 17.4PCh. 17 - Prob. 17.5PCh. 17 - Prob. 17.6PCh. 17 - Prob. 17.7PCh. 17 - Prob. 17.8PCh. 17 - Prob. 17.9PCh. 17 - Prob. 17.10P
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