Problem Set 3

We say that a game is dominance solvable, if iterative deletion of strictly dominated strategies yields a unique outcome. True or false: The above game si dominance solvable. Hint: Consider both pure strategies and mixed strategies to do your domination.

True or false: in the above game the order of elimination of weakly dominated strategies does not matter (that is, the final outcome is the same regardless of the order in which weakly dominated strategies are eliminated.).

[Hint: start the process of iterative elimination of weakly dominated strategies by eliminating different strategies at the beginning of the process.]

Which is a maxmin strategy for player 1:

Apply the Minimax theorem presented in lecture 3-4 to find the payoff that any player must receive in any Nash Equilibrium:

Consider the following assignment device (for example a fair coin):

• With probability 1/2 it tells players 1 and 2 to play B, and with probability 1/2 it tells them to play F.
• Both players know that the device will follow this rule.

What is the expected payoff of each player when both players follow the recommendations made by the device? If one of players follows the recommendation, does the other player have an incentive to follow the recommendation as well?