For each of the following games: 1) Identify the Nash equilibrium/equilibria if they exist, 2) identify all strictly dominant strategies if there are any, and 3) identify the Pareto-optimal outcomes and comment whether they coincide with the Nash Equilibrium(s) you found. Also, 4) would you classify the game as an invisible hand problem, an assurance game, a prisoners dilemma or none of these?
Row Player |
(R1) (R2) |
Column Player (C1) (C2) |
|
(-1,-1) |
(-5,0) |
||
(0,-5) |
(-4,-4) |
Answer for 1)
NE for above game are as follows
If Column player plays C1 then Row player would play R2 and if column player plays C2 then Row player will play R2
If Row player plays R1 then Column player would play C2 and if Row player plays R2 then Column player will play C2
Hence only NE possible is (R2,C2)
Strictly dominant strategy by above logic for Row player is R2 and for Column Player is C2
Answer for 3)
Though NE is (R2,C2) both can improve by shifiting to R1,C1 hence this pair of strategies is pareto optimal
Answer for 4)
Above Game can be classified as Prisonners dilemma
Get Answers For Free
Most questions answered within 1 hours.