Econ 101

Week 5 Practice Problem Solutions

January 31, 2015

1.

(a)

Congress

S T B N

President
0,0
A R A R A R

2,1 0,0 1,2 0,0 1,1 0,0

(b) Congress passes Omnibus. President signs.

(c) Congress passes Spending Cuts. President signs.
(d) Two SPNE: 1) Congress does nothing; 2) Congress passes Spending Cuts, Presi-
dent vetos
(e) Two SPNE: 1) Congress does nothing; 2) Congress passes Spending Cuts, Presi-
dent vetos; Line-item veto makes players worse off

2.

1
 Player 1
b

l1
b

l2
b
 
li
10 li + 2 li 4li
(a)
(b) BR2 (l1 ) = 3 + 14 l1
(c) l1 = 4.2857, l2 (l1 ) = 3 + 14 l1 , l2 = 4.0714

3.

(a)
3 sticks
b P1s turn

3 1
2
b
1 stick b
2 sticks b
P2s turn
P2 wins
2 1
1
b b b
P1s turn
P1 wins P1 wins
1
b

P2 wins

SPNE: Player 1 takes 2 sticks; Player 2 takes 1 stick if Player 1 starts by taking
1 stick
Player 1 wins
(b)
4 sticks b
Current player

1 3
2

3 sticks 2 sticks 1 sticks

Moving Moving Moving
player player player
wins wins loses

2
 SPNE: Player 1 takes 3 sticks initially. f (N ) = N 1 for N < 4
Player 1 wins
(c)
5 sticks b
Current player

1 3
2

4 sticks 3 sticks 2 sticks

Moving Moving Moving
player player player
wins wins wins

SPNE: Any move by player 1. f (N ) = N 1 for N < 5

Player 2 wins
(d) P1 wins when N = 6, 7, 8, P2 wins when N = 9
(e) First player loses when mod(N, 4) = 1 and wins otherwise. Best strategy when
mod (N, 4) = m 6= 1 is to take m 1 sticks.

4.

(a) 4.6667
(b) 1.6667
 
1
(c) B < 5 (1 T )
3. Approaches 4.6667 as T