EXERCISES 1 – SOLUTIONS

1. Consider the following zero-sum normal form game.

a) Find maximin (prudent) strategy equilibium of the game.

ANSWER:

If the ROW player plays “Up”, his minimum payoff is 2. If he plays “Straight”, his minimum payoff is
3. If he plays “Down”, his minimum payoff is 0. To maximize his minimum payoff, he chosses to play
“Straight”. That is, the maximin (prudent) strategy of the ROW player is to play “Straight”.

If the COLUMN player plays “Left”, his minimum payoff is -6. If he plays “Middle”, his min. payoff is
-6 as well. If he plays “Right”, his minimum payoff is -3. To maximize his minimum payoff, he chosses
to play “Right”. That is, the maximin (prudent) strategy of the COLUMN player is to play “Right”.

Then, the maximin (prudent) strategy equilibrium strategies are (Straight, Right), and the
equilibrium payoffs are (3,-3).

b) Does the game have a dominant strategy equilibrium?

ANSWER:

If the COLUMN player plays “Left”, the ROW player plays “Straight”. If the COLUMN player plays
“Middle”, the ROW player plays “Down”. That is, the ROW player does not choose the same strategy
no matter which strategy the COLUMN player plays. Hence, he does not have a dominant strategy.
We do not need to look further in the game; since one of the players lacks a dominant strategy,
there is no dominant strategy equilibrium of this game.
 2. Consider the following normal form game.

a) Is there a dominant strategy equilibrium of the game?

ANSWER:

If the COLUMN player plays “Left”, the ROW player plays “Up”. If the COLUMN player plays
“Center”, the ROW player plays “Down”. That is, the ROW player does not choose the same strategy
no matter which strategy the COLUMN player plays. Hence, he does not have a dominant strategy.
We do not need to look further in the game; since one of the players lacks a dominant strategy,
there is no dominant strategy equilibrium of this game.

b) Is the game dominance solvable?

ANSWER:

If we can reduce the game to a unique outcome via the process of itirative elimination of dominated
strategies, then the game is dominance solvable.
We first need to look at the game to see whether a strategy of a player is dominated by any other
strategy of him:
For the COLUMN player, “Centre” is dominated by “Left”. So, we can first eliminate the strategy
“Centre” of the COLUMN player. In the reduced game, for the ROW player, “Down” is dominated
by “Level”. So, we can eliminate the strategy “Down” of the ROW player. In the reduced game, for
the COLUMN player, “Right” is dominated by “Left”. So, we can eliminate the strategy “Right” for
the COLUMN player. In the reduced game, “Level” is dominated by “Up” for the ROW player. That
is, at the end of the iterative elimination of dominated strategies, a single outcome survives:
(Up, Left) = (1,2). Hence, yes, the game is dominance solvable.
 3. Consider the following normal form game.

a) Is there a dominant strategy equilibrium of the game?

ANSWER:
If the COLUMN player plays “Left”, the ROW player plays “Down”. If the COLUMN player plays
“Middle”, the ROW player plays “Down” again but if the COLUMN player plays “Right”, then the
ROW player plays “Up”. Therefore, the ROW player does not choose the same strategy no matter
which strategy the COLUMN player plays. Hence, he does not have a dominant strategy. We do not
need to look further in the game; since one of the players lacks a dominant strategy, there is no
dominant strategy equilibrium of this game.

b) Is the game dominance solvable?

ANSWER:

We first need to look at the game to see whether a strategy of a player is dominated by any other
strategy of him:
For the COLUMN player, “Right” is dominated by “Middle”. So, we can first eliminate the strategy
“Right” of the COLUMN player. In the reduced game, for the ROW player, “Up” is dominated by
“Down”. So, we can eliminate the strategy “Up” of the ROW player. In the reduced game, for the
COLUMN player, “Middle” is dominated by “Left”. So, we can eliminate the strategy “Middle” for
the COLUMN player. That is, at the end of the iterative elimination of dominated strategies, a single
outcome survives: (Down, Left) = (5,5). Hence, yes, the game is dominance solvable.

c) Find the maximin strategy equilibrium of the game.

ANSWER:
If the ROW player plays “Up”, his minimum payoff is 0. If he plays “Down”, his minimum payoff is
-4. To maximize his minimum payoff, he chosses to play “Up”. That is, the maximin (prudent)
strategy of the ROW player is to play “Up”.

If the COLUMN player plays “Left”, his minimum payoff is 3. If he plays “Middle”, his min. payoff is
-1. If he plays “Right”, his minimum payoff is -2. To maximize his minimum payoff, he chosses to
play “Left”. That is, the maximin (prudent) strategy of the COLUMN player is to play “Left”.

Then, the maximin (prudent) strategy equilibrium strategies are (Up, Left), and the equilibrium
payoffs are (4, 3).