ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Exercise 1.12. Consider the following game. There is a club with three members:
Ann, Bob and Carla. They have to choose which of the three is going to be
president next year. Currently Ann is the president. Each member is both a
candidate and a voter. Voting is as follows: each member votes for one candidate
(voting for oneself is allowed); if two or more people vote for the same candidate
then that person is chosen as the next president; if there is complete disagreement,
in the sense that there is exactly one vote for each candidate, then the person from
whom Ann voted is selected as the next president.
(a) Represent this voting procedure as a game frame, indicating inside each cell of
each table which candidate is elected.
(b) Assume that the players' preferences are as follows: AnnAm Carla Ann Bob,
Carla Bob Ann, Bob Carla Ann Caria
Carla.
Using utility values 0, 1 and 2, convert the game frame into a game.
(c) Apply the IDWDS to the game of part (b). Is there a weak iterated dominant-
strategy equilibrium?
(d) Does the extra power given to Ann (in the form of tie-breaking in case of
complete disagreement) benefit Ann?
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Transcribed Image Text:Exercise 1.12. Consider the following game. There is a club with three members: Ann, Bob and Carla. They have to choose which of the three is going to be president next year. Currently Ann is the president. Each member is both a candidate and a voter. Voting is as follows: each member votes for one candidate (voting for oneself is allowed); if two or more people vote for the same candidate then that person is chosen as the next president; if there is complete disagreement, in the sense that there is exactly one vote for each candidate, then the person from whom Ann voted is selected as the next president. (a) Represent this voting procedure as a game frame, indicating inside each cell of each table which candidate is elected. (b) Assume that the players' preferences are as follows: AnnAm Carla Ann Bob, Carla Bob Ann, Bob Carla Ann Caria Carla. Using utility values 0, 1 and 2, convert the game frame into a game. (c) Apply the IDWDS to the game of part (b). Is there a weak iterated dominant- strategy equilibrium? (d) Does the extra power given to Ann (in the form of tie-breaking in case of complete disagreement) benefit Ann?
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