Scribd
Upload
4 views2 pages

Econ 487 Problem Set 1 Solutions

The document outlines Problem Set 1 for Econ 487, focusing on various decision-making scenarios and game theory concepts. It includes specific problems to solve, with solutions detailing the nature of interactions among players in different contexts. Expected payoffs for given scenarios are calculated using probabilities and respective payoffs.

Uploaded by

Ibrahima Diallo
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
4 views2 pages

Econ 487 Problem Set 1 Solutions

The document outlines Problem Set 1 for Econ 487, focusing on various decision-making scenarios and game theory concepts. It includes specific problems to solve, with solutions detailing the nature of interactions among players in different contexts. Expected payoffs for given scenarios are calculated using probabilities and respective payoffs.

Uploaded by

Ibrahima Diallo
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

Econ 487

Problem Set 1 (Chapter 2)


Solve the following problems from the end-of-the-chapter problems:

1. S1
2. S2
3. S4.

Solutions:
1. (a) Assuming a sufficient supply of yogurt is available for all shoppers, each shopper
is simply making a decision. If some flavors of yogurt were in short supply, then it would be a
game, because shoppers could, for example, make sure to arrive at the store early in order to get
their preferred selections.

(b) Again, probably not an interaction between mutually aware players. (There may
be a strategic component to dress choice if the girls are aware that each is buying one and if there
is some benefit to being different from the others.)

(c) For a college senior, the choice here is a decision, unless you argue that a game is
being played with the student’s future self.

(d) This is a strategic interaction between mutually aware rival firms.

(e) The choice of running mate is a game played between different presidential
candidates looking forward to the payoffs of votes in an upcoming election.

2. (a) (i) Simultaneous play; (ii) zero-sum; (iii) can be repeated, although description is
of a single play; (iv) symmetric imperfect information (neither player has information about the
action being taken by the other); (v) fixed rules; (vi) cooperative agreements are unlikely.

(b) (i) Sequential play; (ii) nonzero-sum game for voters; (iii) usually not repeated
(though some bills may face multiple votes); (iv) full information; (v) fixed rules; (vi) party
apparatus may provide mechanism for cooperation among members of the same party or even
between parties

(c) (i) Simultaneous play; (ii) nonzero-sum; (iii) not repeated; (iv) imperfect
information; (v) fixed rules; (vi) noncooperative.
3. To solve each problem, the probability of each event must be multiplied by its respective
payoff, and then all the results must be added together for the expected payoff.

(a) Expected payoff = 0.5(20) + 0.1(50) + 0.4(0) = 15.

(b) Expected payoff = 0.5(50) + 0.5(0) = 25.

(c) Expected payoff = 0.8(0) + 0.1(50) + 0.1(20) = 7.

You might also like