Find the pure-strategy nash equilibrium, Game Theory

Assignment Help:

Find the pure-strategy Nash equilibrium

Alice is on vacation in Wonderland and considers trying a special mushroom sold by the caterpillar. She cannot tell upfront if the mushroom is good or bad; she only discovers it later if it gives her a stomach ache. For the caterpillar, it costs more to sell good quality mushroom. The payoffs of Alice and the caterpillar are given in the table below:

1253_Find the pure-strategy Nash equilibrium.png

(a) A pure strategy is a strategy that does not involve randomization. Find the pure-strategy Nash equilibrium/equilibria of this game.

(b) Alice likes Wonderland so she decides to stay there for 10 days: the above game is repeated 10 times. Can you find a trigger strategy that induces Buy/Good for all 10 periods? How about the first 9 days?

(c) Alice falls in love with Wonderland and decides to live there for the rest of her life. The above game is thus repeated infinitely. If the interest rate is zero, explain what trigger strategy will induce the cooperative Buy/Good equilibrium.

(d) Assume now that the interest rate is greater than zero, and the game is repeated infinitely. Find a range of r such that the cooperative equilibrium can be sustained.

(e) It is possible that Alice will have to leave Wonderland and return home eventually. More specifically, each period players think that there is a 30% chance that the game does not continue next period. Is the cooperative equilibrium still possible to maintain? If yes, for what values of the interest rate? If not, why not?

 


Related Discussions:- Find the pure-strategy nash equilibrium

Assurance game, Assurance game Scenario "Assurance game" may be a generi...

Assurance game Scenario "Assurance game" may be a generic name for the sport a lot of commonly called "Stag Hunt." The French thinker, Jean Jacques Rousseau, presented the subse

Common information, An item of information of data in a very game is common...

An item of information of data in a very game is common grasp ledge if all of the players realize it (it is mutual grasp ledge) and every one of the players grasp that each one dif

Ship, Ship, Captain and Crew (sometimes called Ship, Captain and Mate) was ...

Ship, Captain and Crew (sometimes called Ship, Captain and Mate) was a popular bar game played for drinks with five dice and throwing cup. Each player gets three throws. He has to

Bidding ring, A set of colluding bidders. Ring participants agree to rig bi...

A set of colluding bidders. Ring participants agree to rig bids by agreeing not to bid against each other, either by avoiding the auction or by placing phony (phantom) bids.

Simultaneous game, A simultaneous game is one during which all players buil...

A simultaneous game is one during which all players build choices (or choose a strategy) while not information of the methods that are being chosen by different players. Although t

Formulate the situation as strategic game - nash equilibrium, Two individua...

Two individuals use a common resource (a river or a forest, for example) to produce output. The more the resource is used, the less output any given individual can produce. Denote

Cournot and Stackelberg., Consider two identical firms, for each firm, the ...

Consider two identical firms, for each firm, the total cost of producing q units of output is C(q)=0.5q^2. The price is determined as P(q1,q2)- a-q1-q2. Estimate Cournots outcome;

Nova, how do tron legacy made?

how do tron legacy made?

Trede cycle theory, what are the theories of financial crisis

what are the theories of financial crisis

Principal agent, A class of games of imperfect data during which one player...

A class of games of imperfect data during which one player (the principal) tries to supply incentives to the opposite (the agent) to encourage the agent to act within the principal

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd