Reference no: EM13188271
Consider the "Odd Couple" game. Felix and Oscar share an apartment, the state of cleanliness of which is a public good. It takes 12 hours of work per week to make the apartment spotlessly clean, 9 hours to be livable, and anything less leaves the apartment in a state that would not stand inspection by the local rodent police. Felix and Oscar each get a (gross) payoff of 2 from a livable apartment, but Felix is a fusspot who assigns a payoff of 10 to a spotless apartment whereas Oscar gets a payoff of only 5. A filthy apartment is worth -10 to Felix but only - 5 to Oscar. Each person's net payoff equals his respective gross payoffs minus his respective hours worked cleaning. The matrix of net payoffs for the game is as follows.
Oscar
3 hours 6 hours 9 hours
Felix 3 hours -13, - 8 - 1, - 4 7, - 4
6 hours - 4, - 1 4, - 1 4, - 4
9 hours 1, 2 1, - 1 1, - 4
Part a. What does Iterated Elimination of Dominated Strategies (IEDS) predict will be the outcome to the odd couple game if "dominated strategies" in the definition of IEDS refers to strict domination.
Part b.What does Iterated Elimination of Dominated Strategies (IEDS) predict will be the outcome to the odd couple game if "dominated strategies" in the definition of IEDS refers to weak domination?
Part c. Identify the Nash equilibria of the game. Explain your reasoning.
Part d.What general conclusions about the appropriate form of "dominated strategies" in determining the set of rationalizable strategies for players and corresponding predicted outcomes in any given game arise from your answer to the above? Explain.
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: Consider the "Odd Couple" game. Felix and Oscar share an apartment, the state of cleanliness of which is a public good. It takes 12 hours of work per week to make the apartment spotlessly clean, 9 hours to be livable, and anything less leaves the ..
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