Reference no: EM133392519

Question

Consider a modified version of the traveler' s dilemma. Imagine that each traveler has only three possible claims they can submit: $50, $75, or $100.

1. Write the game in normal form, assuming that there is a $30 reward for submitting a lower claim and a $30 penalty for submitting a higher claim. Can you solve this by iteratively eliminating dominated strategies?

2. If instead there were only a reward of $30 for submitting a lower claim but no penalt for submitting a higher claim, is there an equilibrium using IEDS? If yes, state t e strategy profile, if not, explain why.

3. If instead there were only a penalty of $30 for submitting a higher claim but no reward for submitting a lower claim, is there an equilibrium using IEDS? If yes, state the strategy profile, if not, explain.