Scribd
Upload
19 views1 page

Correlated vs. Nash Equilibria Analysis

The document contains three problems related to game theory. Problem 1 revises the probabilities in an attack-defense game and asks to calculate the new mixed strategy Nash equilibrium and probability of attack success. Problem 2 presents a volunteer's dilemma game and asks to determine the symmetric Nash equilibria under different benefit and cost conditions. Problem 3 asks to provide a correlated equilibrium for a sibling rivalry game and compare it to the Nash equilibria. The document also includes a comment about how players in monitoring/auditing games may prefer committing to randomized strategies.

Uploaded by

Parmesh Gupta
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
19 views1 page

Correlated vs. Nash Equilibria Analysis

The document contains three problems related to game theory. Problem 1 revises the probabilities in an attack-defense game and asks to calculate the new mixed strategy Nash equilibrium and probability of attack success. Problem 2 presents a volunteer's dilemma game and asks to determine the symmetric Nash equilibria under different benefit and cost conditions. Problem 3 asks to provide a correlated equilibrium for a sibling rivalry game and compare it to the Nash equilibria. The document also includes a comment about how players in monitoring/auditing games may prefer committing to randomized strategies.

Uploaded by

Parmesh Gupta
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

EC 264: Decisions & Games

Problem Set VI

Problem 1: Reconsider the Attack-Defense game presented in the Lecture Slides on


Coordination Games. Suppose that due to changes in weather conditions, it has become a bit
easier to defend “location N”. Specifically, if the defender defends “location N” and the
attacker attacks “location N”, then the probability that the defense will succeed rises from
60% to 65% (and consequently, the probability that the attack will succeed falls from 40% to
35%). There is no other change in the payoff matrix.
(i) Calculate the new mixed strategy Nash equilibrium of the Attack-Defense game.
(ii) In the new equilibrium, what is the probability that an attack will succeed?

Problem 2: Consider the following Volunteer’ Dilemma game: N ≥ 2 persons witness an


ongoing crime. The following benefits/costs hold for each person P: If P calls the police she
gets a gross benefit of [B + Δ] and incurs a logistical cost of C. If someone else calls the
police, P gets a gross benefit of B and incurs no cost [Δ is the “warm glow effect” of being a
“good Samaritan”]. If no one calls the police, P receives no benefit and incurs no cost.
(i) Determine the symmetric Nash equilibrium of the game when B > C and Δ < C.
(ii) Determine the symmetric Nash equilibrium of the game when B > C and Δ > C.

Problem 3: Correlated equilibria vs. Nash equilibria


Write down a correlated equilibrium in the Sibling Rivalry game. Does the ‘stochastic
outcome’ of your stated correlated equilibrium Pareto-dominate the ‘stochastic /deterministic
outcomes’ of all Nash equilibria of the Sibling Rivalry game?

___________________________________________________________________________
A comment on Monitoring/Auditing Games
Here is one correct way to think about the Monitoring/Auditing Games that we talked about
in class.
Consider a two-player game between X and Y, where SX (resp., SY) is player X’s (resp., Y’s)
pure strategy set. Consider either of the following games:
Game 1: Y plays his strategy from SY, and this is not publicly observed; and then X plays her
strategy from SX. [Think of Y being a student choosing to study or not, and X being a teacher
deciding or whether or not to hold an exam.]
Game 2: Y plays his strategy from SY, and this is publicly observed; then X plays her strategy
from SX. [Think of Y being a tax-filer choosing how much income to report, and X being the
Tax Authority deciding or whether or not to audit the tax return.]
In either of these games, suppose the following condition applies. Before the beginning of
the game, X can publicly announce and commit to the strategy (pure or mixed) that she will
play (from SX) when her turn comes; and Y plays her strategy (pure or mixed) after being
informed of X’s committed strategy.
When that condition applies, then, at the beginning of the game, X might strictly prefer to
commit to a randomized strategy over her pure-strategy set SX.

You might also like