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L7: Solving The Sample Exam Question
L7: Solving The Sample Exam Question
L7: Solving The Sample Exam Question
Let us(X|Y) denote the payoff to player s if players of set X attend the party and players of set Y do not.
(a) u2({1,2}|{3,4,5,6}) = 2-2 = 0 u2({1}|{2,3,4,5,6}) = 0
u3({1,2}|{3,4,5,6}) = 0
u3({1,2,3}|{4, 5,6}) = 3-2 = 1
The strategy is not a Nash Equilibrium because student 3 has an incentive to attend rather than not attending.
(b)
u4({1,2,3}|{4,5,6}) = 0
u4{1,2,3,4}|{5,6}) = 4-5 = -1
The strategy is a Nash Equilibrium. Student 3 (and also 2 and 1) has no incentive not to attend. Also, student 4 (and also 5 and 6) has no incentive to attend.
us(A,m) denote the payoff to player s if s attends and an additional m of the other players also attend. us(N,m) = 0 is the payoff to player s if s does not attend and an additional m of the other players do attend.
(c) We first test wither it is a dominant strategy for student 1 to attend u1(A,0) = 1-1 = 0 u1(A,1) = 2-1 = 1 u1(N,0) = 0 u1(N,1) = 0
u1(N,2) = 0 u1(N,3) = 0
u1(N,4) = 0
u1(A,5) = 6-1 = 5
u1(N,5) = 0
However, we cannot say anything about student 2. u2(A,0) = 1-2 = -1 u2(N,0) = 0 u2(A,2) = 3-2 = 1 u2(N,2) = 0 In a similar way, we cannot say anything about students 3, 4 and 5. We now test wither it is a dominant strategy for student 6 not to attend u6(A,0) = 1-6 = -5 u6(N,0) = 0 u6(A,1) = 2-6 = -4 u6(N,1) = 0
u6(N,2) = 0 u6(N,3) = 0
u6(N,4) = 0
u6(A,5) = 6-6 = 0
u6(N,5) = 0
(d) By dominated strategy deletion, we assume that student 1 attends the party and student 6 does not.
We now test whether, in the reduced game, it is a dominant strategy for student 2 to attend
u2(A,1) = 2-2 = 0
u2(A,2) = 3-2 = 1
u2(N,1) = 0
u2(N,2) = 0
u2(A,3) = 4-2 = 2
u2(A,4) = 5-2 = 3
u2(N,3) = 0
u2(N,4) = 0
Thus, the strategy of student 2 not attending is weakly dominated in the reduced game
We now test whether, in the reduced game, it is a dominant strategy for student 5 not to attend u5(A,1) = 2-5 = -3 u5(N,1) = 0
u5(A,2) = 3-5 = -2
u5(A,3) = 4-5 = -3 u5(A,4) = 5-5 = 0
u5(N,2) = 0
u5(N,3) = 0 u5(N,4) = 0
Thus, the strategy of student 5 attending is weakly dominated in the reduced game.
Under the iterated deletion of dominated strategies, we assume that students 1 and 2 attend the party and students 5 and 6 do not. We now test whether, in the reduced game, it is a dominant strategy for student 3 to attend
u3(A,2) = 3-2 = 1 u3(A,3) = 4-2 = 2 u3(N,2) = 0 u2(N,3) = 0
Thus, the strategy of student 3 not attending is strongly dominated in the reduced game
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We now test whether, in the reduced game, it is a dominant strategy for student 4 not to attend u4(A,2) = 3-5 = -2 u4(A,3) = 4-5 = -1 u4(N,2) = 0 u4(N,3) = 0
Thus, the strategy of student 4 attending is strongly dominated in the reduced game
We have now deleted all strategies apart from one: students 1, 2 and 3 attend, while students 4, 5 and 6 do not attend.
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(e) Suppose that no students attend the party. Checking incentives for a student to attend, the value of attending as 1 and the cost of travelling is at least 1. Thus, not student is better off by attending.
Suppose that all students attend. Checking incentives for a student not to attend, the value of attending, which is 6 is lost, and the cost of travel, which is up to 6 is gained. Thus the gain never exceeds the loss. Thus, the no students attending and all students attending are Nash Equilibria.