ECON 171 Midterm: ECON 171 Midterm Winter 2014
Document Summary
Two players, a and b, have a chance to contribute e ort to. Problem 1. supplying a resource that is valuable to both of them. Where xa is the e ort level of player a and xb the e ort level of player b, the amount of the resource that will be supplied is equal to max{xa, xb}, which is the maximum of xa and xb. Each player can choose one of two e ort levels, 0 or 5. If a player exerts e ort level x and the amount of the resource supplied is y , the payo to that player is 2y x. The players must move simultaneously, without observing each others actions: show an extensive form representation of this game, labeling relevant information sets. I will leave this up to you: show a strategic form representation of this game. Does this game have any strictly dominated strategies.
