Econ 106G Spring 2018

Homework 1: Dominated Stratgies, Best Responses

The due date for this homework is Friday April 20th in section.

1. Game Theory Concepts, True-False: For each of the following statements, state
whether it is true or false. If it is false, provide a counter-example:

(a) In any game, any strategy of any player is a best response to some beliefs this
player has about the strategies of his opponents.
(b) In any game, any player can have at most one strictly dominant strategy.
(c) In any game, any player can have at most one strictly dominated strategy.
(d) A player can have at most one strictly dominant strategy.
(e) A player can have at most one weakly dominant strategy.

2. Chicken: (based loosely on “Rebel without a Cause”): Jim and Buzz are racing
towards each other in their stolen sports cars at 100mph. Each of them can either stay
course, or chicken out and swerve. If both keep going straight they will both die: utility
12. If Jim keeps going straight and Buzz chickens out Jim will gain the admiration
of Judy for a utility of 5; and Buzz looses in social prestige for a total utility of 0, and
vice versa. If both chicken out the loss in prestige is not as great: utility 1.

Buzz
Straight Chicken
Jim Straight 12 , 12 5 , 0
Chicken 0 , 5 1, 1
(a) Does either player have a strictly dominant or strictly dominated strategy?
(b) What are the rationalizable strategies for the players?
(c) Is this game dominance solvable?
(d) Jim believes that Buzz will go straight with probability p and chicken out with
probability 1 p. What is his best response as a function of p?

3. Simpler Beauty Contest: Consider the version of the Beauty Contest game from
the class, in which the players are trying to guess the average guess minus one. More
precisely, the utilities now are:
X
ui (si ; sj ) = jsi (s 1)j, where s = sj =#I
j2I

(a) Which strategies are strictly dominated in this game, and by which alternative
strategies? And so, what is the set of strategies BRi1 ?

1
 (b) What is the set BRi2 ? What is the set BRin for any n > 0?

4. Electoral Competition with primaries (hard!). Think about the following ver-
sion of the Electoral Competition game. There are four players: democrat incum-
bent, democrat challenger, republican incumbent and republican challenger (subscripts
di; dc; ri; rc). For the two republicans the strategy sets are Sri = Src = f5; 6; 7; 8; 9g,
and for two democrats they are Sdi = Sdc = f1; 2; 3; 4; 5g.
Now, the story is this. Players chose their platforms only once and for all. Then,
…rst, two democrats compete in the primaries, and so do the two republicans. If one
democrat got more votes than the other, he moves on to the …nal elections; in the case
of a tie between the democrats, the incumbent moves on. Exactly the same happens
with the republicans. For the democrat and the republican that lost the primaries the
payo¤s are very low (say, zero). For the democrat and the republican that moved to
the …nal stage, the payo¤s are just like in the game we analyzed in the class.
For example, for the strategies sdi = 5; sdc = 5; sri = 6; src = 7 we have:
- each democrat gets the same votes in the primaries, and so the challenger loses,
udc (s) = 0
- republican challenger gets 300 votes in primaries (from people supporting 7; 8; 9) and
incumbent gets 200. Incumbent looses, uri (s) = 0:
- in the …nal game democrat incumbet gets 550 votes (from 1; 2; 3; 4; 5 and half from
6) and republican challenger gets 350 (from 9; 8; 7 and half from 6). So udi (s) = 550;
urc (s) = 350:
Think carefully and slowly.

(a) Which strategies are strictly dominated for the republican challenger?
(b) Which strategies are strictly dominated for the republican incumbent?
2 2
(c) Which strategies are in BRri and BRrc ?
(d) Is the game dominance solvable? Why not?