ECON 4180 Lecture Notes - Lecture 6: Nash Equilibrium, Extensive-Form Game, Solution Concept

37 views8 pages

sangriaplatypus369

28 Mar 2016

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Dynamic games of complete information (chapters 14-15: extensive form with an in nite number of actions. In some games a player can choose from an in nite number of actions. For example, investment, price, advertising, etc. requires an action choice from a continuum of possible actions by nature. Suppose that rm 1 decides how much to spend on advertising and rm 2, after observing rm 1"s choice, de- cides whether to exit or stay in the market. Because the advertising spending can be any number between 0 and in nity, we use the arc as shown in (a). If rm 2 does not observe rm 1"s choice, then it is the game of imperfect information and thus we use the dashed line over the arc as shown in (b). Recall that the de nition of a strategy is a complete contingent plan. Thus, player 2"s strategy must specify player 2"s choice according to all possible information set.

Related Questions

QUESTION 3

Mark all the FALSE statements

	A.	An equilibrium is a collection of strategies (and a strategy is a complete plan of action), whereas an outcome describes what will happen only in the contingencies that are expected to arise, not in every contingency that might arise.
	B.	In games of complete but imperfect information, backward induction is still the strongest process to solve the model to get unique equilibrium.
	C.	All subgame perfect Nash equilibria (SPNE) are Nash equilibria (NE), but not all Nash equilibria is SPNE
	D.	We cannot apply the notion of Nash equilibrium to dynamic games of complete information if we allowed a player s strategy to leave unspecified actions in some contingencies.
	E.	A game can be of perfect information whenever Nature or Luck does not play, each information set does not necessarily need to have a single node.

20 points

QUESTION 4

True or false. Mark the correct sequence:
I. Simultaneity of moves means that these games have imperfect information.
II. Dynamic games of complete and perfect information do not necessarily need that a player observes all the previous moves, just part of them are fine.
III. Backward induction and subgame perfect equilibrium concept lead to the same result in games of incomplete information.
IV. Any game in extensive form is a subgame itself.

	A.	TFFT
	B.	TTTF
	C.	FTFF
	D.	TTFT

20 points

QUESTION 5

The subgame perfect Nash equilibrium is the equilibrium associated with ____________ outcome. Subgame perfect equilibrium ________ non-credible threats.

	A.	Maxmin; involves
	B.	the backward induction; does not involve
	C.	Iterative deletion of weakly dominated strategies; rules out
	D.	the backward induction; includes

QUESTION 1

Stackelberg duopoly game is also known as the ________ model. If we change the Stackelberg ______ competition game to a simultaneous-move game, we get the ______ game results.

	A.	leader-follower, quantity; Cournot
	B.	Competitive fringe; price; backward induction
	C.	leader-follower, quantity; Bertrand
	D.	entry, price; Cournot

QUESTION 2

Comparing Stackelberg and Cournot competition results, we can say that the _____ is better off while the ______ is worse off under Stackelberg than under Cournot results. This result show that there is _______________ advantage.

	A.	entrant, incumbent, investment
	B.	leader, follower, first-mover
	C.	follower, leader, a size
	D.	incumbent, entrant, first-mover

QUESTION 3

Mark all the FALSE statements

	A.	An equilibrium is a collection of strategies (and a strategy is a complete plan of action), whereas an outcome describes what will happen only in the contingencies that are expected to arise, not in every contingency that might arise.
	B.	In games of complete but imperfect information, backward induction is still the strongest process to solve the model to get unique equilibrium.
	C.	All subgame perfect Nash equilibria (SPNE) are Nash equilibria (NE), but not all Nash equilibria is SPNE
	D.	We cannot apply the notion of Nash equilibrium to dynamic games of complete information if we allowed a player s strategy to leave unspecified actions in some contingencies.
	E.	A game can be of perfect information whenever Nature or Luck does not play, each information set does not necessarily need to have a single node.

QUESTION 4

	A.	TFFT
	B.	TTTF
	C.	FTFF
	D.	TTFT

QUESTION 5

The subgame perfect Nash equilibrium is the equilibrium associated with ____________ outcome. Subgame perfect equilibrium ________ non-credible threats.

	A.	Maxmin; involves
	B.	the backward induction; does not involve
	C.	Iterative deletion of weakly dominated strategies; rules out
	D.	the backward induction; includes

ECON 4180 Lecture Notes - Lecture 6: Nash Equilibrium, Extensive-Form Game, Solution Concept

Document Summary

Get access

Related Documents

ECON 4180 Lecture Notes - Lecture 9: Subgame Perfect Equilibrium, Solution Concept, Discounting

BIOC 212 Chapter Notes - Chapter 12: Strategic Dominance, Solution Concept, Nash Equilibrium

ECO316H1 Lecture Notes - Lecture 11: Nash Equilibrium, Sequential Equilibrium, Terminal And Nonterminal Symbols

Related Questions