tamella

tamella

Lv10

Saint Louis University - Baguio City

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3 Following
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ANSWERS

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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

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