Question

Haymitch Prices Low Haymitch Prices High Yoda Prices Low 30, 40 55, 30 Yoda Prices High...

Haymitch Prices Low

Haymitch Prices High

Yoda Prices Low

30, 40

55, 30

Yoda Prices High

25, 70

50, 50

a.Are there any pure strategy Nash equilibria? Explain

b.Is there a mixed strategy Nash equilibrium? Explain

c.Is there any advantage for Haymitch to choose first? How about Yoda?

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Homework Answers

Answer #1

Answer for 1

Yes we have PSNE here and that is equal to (Yoda low,Haymitch low)

Ans for 2

No there is no mixed strategy Nash equilibrium because both the players have their own dominant strategy

Hence they will choose that dominant strategy with certainty

Therefore no mixed strategy Nash equilibrium here

Ans for 3

Haymitch decudes first then he will decide low prices as he knows in any case he has an expected payoff of (70+40/2)=55

And again original NE achieved therefore no first mover advantage

Similarly if Yoda plays first even then NE is acheived that is previously discussed

Hence no first mover advantage

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