Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
If the players play pure strategies, the game has no Nash equilibrium. But what if they choose their moves randomly? Let each player instead opt for a mixed strategy instead of a pure strategy. The first will play action Z with probability p, and the second will play action L with probability q. At which pair (p, q) are the mixed strategies of the players in equilibrium? At which pair (p, q) does neither player want to change strategy? When are both strategies simultaneously the best response?
Transcribed Image Text:q 1-q
L
D
Р
Z
3,1
4,2
1-p S
S 1,4
5,0
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