Q2)
a) (5 points) Represent this situation in a matrix form. Clearly specify who chooses among
rows and who chooses among columns. You are provided will all the necessary information
to compute the utilities; do not assume your own utilities.
b) (5 points) In the matrix you created in (a), nd all strategy proles which survive iterated
elimination of strictly dominated strategies.
c) (5 points) In the matrix you created in (a), nd all strategy proles which survive iterated
elimination of weakly dominated strategies.
d) (5 points) In the matrix you created in (a), nd all Nash equilibria (pure strategies).
Q3)
a) Start with a story. Explain, in English, a problem you want to analyze. Your story should
not be longer than 1 page. You can pick whatever topic you want. The only restriction
is that (i) the game must have exactly two players, (ii) each player has a nite number of
strategies (at least two), and (iii) the game is your own invention. If you copy or just modify
a game that you found on the Internet or in a book or saw in class, then your grade for this
exercise will be zero. Be creative!
b) Create that matrix that depicts the story you wrote in (a). In particular, explain how you
constructed the payos.
c) Find all (pure-strategy) Nash equilibria in the matrix you draw in (b).
Q4)
a) (20 points) Depict best-response correspondences of Ann and Bob.
b) (10 points) Find all (pure strategy) Nash equilibria.