Two people have $4 to divide between themselves. They use the following process to divide the money. Each person names a number of dollars (a nonnegative integer), at most equal to 4. If the sum of the mounts that the people name is at most 4, then each person receives the amount of money she names (and the remainder is destroyed). If the sum of the amounts that the people name exceeds 4 and the amounts named are different, then the person who names the smaller amount receives that amount and the other person receives the remaining money. If the sum of the amounts that the people name exceeds 4 and the amounts named are the same, then each person receives $2. (a) Write a payoff matrix to represents the game. (b) Find all strictly dominated strategies for each player. (c) Find all weakly dominated strategies for each player. (d) Find all the Nash equilibria of the game in pure strategies.

Two people have $4 to divide between themselves. They use the following process to divide the money. Each person names a number of dollars (a nonnegative integer), at most equal to 4. If the sum of the mounts that the people name is at most 4, then each person receives the amount of money she names (and the remainder is destroyed). If the sum of the amounts that the people name exceeds 4 and the amounts named are different, then the person who names the smaller amount receives that amount and the other person receives the remaining money. If the sum of the amounts that the people name exceeds 4 and the amounts named are the same, then each person receives $2. (a) Write a payoff matrix to represents the game. (b) Find all strictly dominated strategies for each player. (c) Find all weakly dominated strategies for each player. (d) Find all the Nash equilibria of the game in pure strategies.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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