ECO326H5 Study Guide - Quiz Guide: Inverse Demand Function, Nash Equilibrium, Coordination Game
Document Summary
Mid-term test for eco 316 (applied game theory) Question 1: matrix (normal) form game [15 points] Part (a) [5 points]: consider the following situation: two people (players) are involved in a gamble. Each player has one coin and simultaneously chooses whether to show the head or the tail of that coin. If both players show the same sides, then player 2 pays player. 1 a dollar; if they show different sides, player 1 then pays player 2 a dollar. Each person cares only about the amount of money she/he receives and prefers to receive more than less. Formulate this situation as a strategic game. (hint: a matrix is enough) Part (b) [4 points]: find all pure strategy nash equilibria in the following coordination game (note: this question is not related with part (a)): Part (c) [3 points]: find all pareto ef cient outcomes for the game in part (b).
