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978-0393919684 Chapter 1 Lecture Note Chapter 1 & 2 Part 1
PART ONE—Introduction and General Principles CHAPTER 1: Basic Ideas and Examples and CHAPTER 2: How to Think about Strategic Games Teaching Suggestions These chapters try to arouse the students’ interest and prepare the groundwork for the analysis to come. Chapter […]
978-0393919684 Chapter 1 Lecture Note Chapter 1 & 2 Part 2
GAME 4—The Tire Story (The Pure Coordination Game) Another game that we have successfully played in the first lecture is based on the “We can’t take the exam; we had a flat tire” story from Section 2 of Chapter 1. […]
978-0393919684 Chapter 10 Lecture Note Part 1
CHAPTER 10 The Prisoners’ Dilemma and Repeated Games Teaching Suggestions The idea that tacit cooperation can be sustained in an ongoing relationship is very simple and students easily accept it. The formal analysis in a repeated game is much harder […]
978-0393919684 Chapter 10 Lecture Note Part 2
Game Playing in Class GAME 1—Paired Prisoners’ Dilemma Students can be paired off and instructed to play several versions of a particular game with a prisoners’ dilemma structure. Provide each pair with a sheet describing the payoff table for the […]
978-0393919684 Chapter 10 Solution Manual Part 1
Solutions to Chapter 10 Exercises SOLVED EXERCISES S1. False. The players are not assured that they will reach the cooperative outcome. Rollback S2. (a) The payoffs are ranked as follows: high payoff from cheating (72) > cooperative payoff (64) > […]
978-0393919684 Chapter 10 Solution Manual Part 2
Solutions to Chapter 10 Exercises UNSOLVED EXERCISES U1. See the following payoff table: Baker 10 100 Both players have dominant strategies, 90:10 for Cutler and 100 for Baker. Therefore, the equilibrium consists of these two strategies, and the payoffs are […]
978-0393919684 Chapter 11 Lecture Note Part 1
CHAPTER 11 Collective-Action Games Teaching Suggestions A good way to introduce the topic of coordination games is to have the students play one. There are two suggestions below. One can be used to lead into a general discussion of the […]
978-0393919684 Chapter 11 Lecture Note Part 2
Game Playing in Class GAME 1—Check Marks Prepare a handout or cards and ask students to place either a blank line or a check mark on the paper. Tell them that if fewer than half of the students in the […]
978-0393919684 Chapter 11 Solution Manual
Solutions to Chapter 11 Exercises SOLVED EXERCISES (b) Because the line for action X is above the line for action Y when 100 people choose X, and because we expect the number choosing X to decrease from this point—see part […]
978-0393919684 Chapter 12 Lecture Note
CHAPTER 12 Evolutionary Games Teaching Suggestions How much time you want to spend on this material will depend on the focus of your course. For many social science courses, a general exposure to the ideas, based on a quick run […]
978-0393919684 Chapter 12 Solution Manual Part 1
Solutions to Chapter 12 Exercises SOLVED EXERCISES S1. (a) The payoff table for the two types of travelers follows: High Low (b) The graph is shown below: (c) There are three possible equilibria: a stable monomorphic equilibrium of all Low […]
978-0393919684 Chapter 12 Solution Manual Part 2
Solutions to Chapter 12 Exercises UNSOLVED EXERCISES U1. (a) Payoff table is shown below. When two fighters meet, each has a 50% probability of Let x represent the population proportion of sharers (S). Then the fitness of a fighter (F) […]
978-0393919684 Chapter 12 Solution Manual Part 3
U7. (a) When t = 0.5, the fitness of tortoises is FT = 0.5c + 0.5(–2) = 0.5c – 1, and the fitness of hares is FH = 0.5(1) + 0.5(0) = 0.5. Tortoises are more fit than hares when […]
978-0393919684 Chapter 13 Lecture Note
CHAPTER 13 Mechanism Design Teaching Suggestions A good way to get students to understand the key issues and concepts of this chapter may be to remind or tell them about Karl Marx’s claims about the communist society he envisioned (in […]
978-0393919684 Chapter 13 Solution Manual Part 1
Solutions to Chapter 13 Exercises SOLVED EXERCISES S1. Some examples of incentive schemes that help induce more care on the part of policy holders: 1. The insurer can provide a multiyear contract or otherwise establishes an ongoing relationship in 2. […]
978-0393919684 Chapter 13 Solution Manual Part 2
S7. (a) As in Exercise S3, part (a), we can conclude that there are only three sensible prices to consider for popcorn: $1.50, $3.50, or $4.00. These three prices yield the following quantities sold, given individuals’ values for popcorn: So […]
978-0393919684 Chapter 13 Solution Manual Part 3
Solutions to Chapter 13 Exercises S12. (a) If Oceania only offers a contract designed for the low-cost type of firm, then we have no To find the optimal levels of Q and M for this contract, we maximize the public […]
978-0393919684 Chapter 13 Solution Manual Part 4
U4. (a) If the team owners can identify the type of each fan, they will sell blue-collar fans an (b) The incentive-compatibility constraints are : 12 15 3 : 22 14 8 b w IC X Y Y X IC […]
978-0393919684 Chapter 13 Solution Manual Part 5
U10. (a) πL = M – 0.1Q πH = M – 0.16Q (d) Oceania’s expected net benefit is 1 1 2 2 0.6(2 ) 0.4(2 ).B Q M Q M= – + – (e) Assuming IC1 binds: M1 – 0.1Q1 […]
978-0393919684 Chapter 14 Lecture Note
PART FOUR—Application to Specific Strategic Situations CHAPTER 14 Brinkmanship: The Cuban Missile Crisis Teaching Suggestions If you are going to use the Cuban missile crisis case presented in the text as your teaching vehicle for brinkmanship, we urge you to […]
978-0393919684 Chapter 14 Solution Manual Part 1
Solutions to Chapter 14 Exercises SOLVED EXERCISES S1. (a) In the pure-threat case, the union’s expected payoff is 50(1 – p) – 100p = 50 – 150p. The (b) Diagram is given below: (c) The union sets up a situation […]
978-0393919684 Chapter 14 Solution Manual Part 2
Solutions to Chapter 14 Exercises UNSOLVED EXERCISES U1. (a) The diagram is shown below: Games of Strategy, Fourth Edition Copyright © 2015 W. W. Norton & Company (b) The effectiveness condition specifies the minimum value of q for the United […]
978-0393919684 Chapter 14 Solution Manual Part 3
U5. (a) ANTI-BALLISTIC MISSLE SITE IN POLAND In August 2008, after 18 months of negotiations, the United States signed an agreement with Poland to base anti-ballistic-missile missiles—or interceptors—on Polish soil.1 A related radar site is Russia contends that the placement […]
978-0393919684 Chapter 15 Lecture Note
CHAPTER 15 Strategy and Voting Teaching Suggestions Most students will be familiar with at least a few of the vari ous aggregation methods used to determine winners in elections. You may want to poll the class and come up with […]
978-0393919684 Chapter 15 Solution Manual
Solutions to Chapter 15 Exercises SOLVED EXERCISES S1. Under truthful voting, A should match Geology and Sociology in the first vote, with the winner S2. Allocate points in the following way: 5 for a first-place vote, 2 for a second-place […]
978-0393919684 Chapter 16 Lecture Note
CHAPTER 16 Bidding Strategy and Auction Design Teaching Suggestions Most students nowadays will have used some Internet auction sites, certainly as buyers, and several as sellers. You can start a discussion related to their own experiences and bring in the […]
978-0393919684 Chapter 16 Solution Manual
Solutions to Chapter 16 Exercises SOLVED EXERCISES S1. The painter can compare her estimated cost with a job’s true cost only when she does the job. But the painter does a job only when she agrees (through the bidding process) […]
978-0393919684 Chapter 17 Lecture Note
CHAPTER 17 Bargaining Teaching Suggestions Newspapers often print articles of advice on bargaining for buyers of houses, autos, and so on. We found a particularly good one that we mention in the text: Andrée Brooks, “Honing Haggling Skills” (New York […]
978-0393919684 Chapter 17 Solution Manual
Solutions to Chapter 17 Exercises SOLVED EXERCISES S1. The businessman’s BATNA is probably quite low; holding onto the domain name may be worth very little to him. Owning the domain name, which makes it easier for people to find the […]
978-0393919684 Chapter 2 Solution Manual
Solutions to Chapter 2 Exercises SOLVED EXERCISES S1. (a) Assuming a sufficient supply of yogurt is available for all shoppers, each shopper is (b) Again, probably not an interaction between mutually aware players. (There may be a strategic component to […]
978-0393919684 Chapter 3 Lecture Note
PART TWO—Concepts and Techniques CHAPTER 3 Games with Sequential Moves Teaching Suggestions Most students find the idea of rollback very simple and natural, even without drawing or understanding trees. Of course, they start by being able to do only one […]
978-0393919684 Chapter 3 Solution Manual Part 1
Solutions to Chapter 3 Exercises SOLVED EXERCISES S1. (a) There is one initial node (I) for Hansel making the first move; three decision nodes (D) (b) There is one initial node (I) for Hansel making the first move; four decision […]
978-0393919684 Chapter 3 Solution Manual Part 2
Solutions to Chapter 3 Exercises S10. (a) The game tree is shown below: Games of Strategy, Fourth Edition Copyright © 2015 W. W. Norton & Company Games of Strategy, Fourth Edition Copyright © 2015 W. W. Norton & Company (b) […]
978-0393919684 Chapter 4 Lecture Note
CHAPTER 4 Simultaneous-Move Games: Discrete Strategies Teaching Suggestions This chapter develops a succession of examples to illustrate the concept of Nash equilibrium when each player chooses from a finite number of discrete pure strategies. It also addresses the various issues […]
978-0393919684 Chapter 4 Solution Manual Part 1
Solutions to Chapter 4 Exercises SOLVED EXERCISES S1. (a) For Rowena, Up strictly dominates Down, so Down may be eliminated. For Colin, Right (c) There are no dominated strategies for Rowena. For Colin, Left dominates Middle and Right. Thus these […]
978-0393919684 Chapter 4 Solution Manual Part 2
Solutions to Chapter 4 Exercises UNSOLVED EXERCISES U1. (a) For Colin, Right dominates Left, so Left is eliminated. Then for Rowena Up dominates (b) Starting with Colin, Left dominates Right, so Right is eliminated. Then for Rowena Straight dominates both […]
978-0393919684 Chapter 5 Lecture Note
CHAPTER 5 Simultaneous-Move Games: Continuous Strategies, Discussion, and Evidence Teaching Suggestions The basic concepts of simultaneous moves, best responses, and Nash equilibrium were motivated in Chapter 4 in the context of discrete strategies. The new issues arising when strategies are […]
978-0393919684 Chapter 5 Solution Manual Part 1
Solutions to Chapter 5 Exercises SOLVED EXERCISES S1. (a) R’s best-response rule is given by y = 10√x – x. L spends $16 million, so x = 16. Then (b) R’s best response is y = 10√x – x, and […]
978-0393919684 Chapter 5 Solution Manual Part 2
Solutions to Chapter 5 Exercisess UNSOLVED EXERCISES U1. (a) DTC’s profit is YDTC = PQDTC – 12QDTC = (120 – QDTC)QDTC – 12QDTC = –QDTC2 + 108QDTC. The profit-maximizing quantity for DTC is QDTC = 54. (b) Now DTC’s profit […]
978-0393919684 Chapter 6 Lecture Note
CHAPTER 6 Combining Sequential and Simultaneous Moves Teaching Suggestions This chapter introduces three new concepts and associated techniques: (1) multistage games where a simultaneous-move game occurs at one or more of the stages; (2) the effects of changing the rules […]
978-0393919684 Chapter 6 Solution Manual Part 1
Solutions to Chapter 6 Exercises SOLVED EXERCISES S1. Second-mover advantage. In a sequential game of tennis, the second mover can best respond to the first mover’s chosen action. Put another way, the second mover can exploit the information she learns […]
978-0393919684 Chapter 6 Solution Manual Part 2
Solutions to Chapter 6 Exercises S10. (a) The game tree is shown below: Frieda’s has two actions at one node, so it has two strategies. (b) The strategic form is given below: Games of Strategy, Fourth Edition Copyright © 2015 […]
978-0393919684 Chapter 6 Solution Manual Part 3
U4. (a) The strategic form of the game follows: Severus = x Severus = y Pure-strategy Nash equilibria are indicated by double borders. The unique subgame-perfect Nash equilibrium is (SS, aa, y), with payoffs of (2, 1, 1). (b) The […]
978-0393919684 Chapter 6 Solution Manual Part 4
U10. (a) The game table for the first-stage game follows: Nancy Yes No Monica (b) The two pure-strategy Nash equilibria are indicated by double borders in the preceding table: (Y, N) with payoff of (5.5, 7.25) and (N, Y) with […]
978-0393919684 Chapter 7 Lecture Note Part 1
CHAPTER 7 Simultaneous-Move Games: Mixed Strategies Teaching Suggestions This chapter introduces mixed strategies and the methods used to solve for mixed-strategy equilibria in zero-sum and non-zero-sum games. For zero-sum games, students are likely to accept the idea of randomization more […]
978-0393919684 Chapter 7 Lecture Note Part 2
Classical Game Theory You can give a more rigorous treatment of bimatrix games, building on some of the material in the online appendix to this chapter. The best reference for this is still Luce and Raiffa’s Games and Decisions (New […]
978-0393919684 Chapter 7 Lecture Note Part 3
U11. (a) Yes. The pure-strategy Nash equilibrium is (Land, Sea). (b) Let p1 be the probability that Patton plays Air and p2 be the probability that Patton plays Sea, so that 1 – p1 – p2 is the probability that […]
978-0393919684 Chapter 7 Solution Manual Part 1
Solutions to Chapter 7 Exercises SOLVED EXERCISES S1. (a) The game most resembles an assurance game because the two Nash equiibria occur when the players use symmetric moves. (Here they both use the same moves to arrive at the (b) […]
978-0393919684 Chapter 7 Solution Manual Part 2
Solutions to Chapter 7 Exercises S12. (a) The kicker’s expected payoffs playing against the goalie’s mixed strategy of L 42.2%, R 42.2%, and C 15.6% are as follows: HL 42.2(0.50) + 15.6(0.85) + 42.2(0.85) = 70.23 (b) Thus, the kicker […]
978-0393919684 Chapter 8 Lecture Note
PART THREE—Some Broad Classes of Games and Strategies CHAPTER 8 Uncertainty and Information Teaching Suggestions Section 1 The crucial idea to convey is that reducing risk by sharing or pooling depends on the risks not being too positively correlated. A […]
978-0393919684 Chapter 8 Solution Manual Part 1
Solutions to Chapter 8 Exercises SOLVED EXERCISES S1. (a) Your neighbor has a sure income of $100,000. In addition, under the insurance contract, he will receive x when you have a good year and pay you $60,000 when you have […]
978-0393919684 Chapter 8 Solution Manual Part 2
Oscar’s play after Felix’s payoff when card draws are Felix’s expected payoff Hi Lo Hi Lo HiHi HiLo LoHi LoLo P P F F 0 8 –8 0 0 P P S S 0 8 –8 0 0 P P […]
978-0393919684 Chapter 8 Solution Manual Part 3
U8. (a) The extensive form of this game is shown below: (b) eBay has an incentive to bluff, which in this case would consist of proposing a stingy (c) The game table follows: Games of Strategy, Fourth Edition Copyright © […]
978-0393919684 Chapter 8 Solution Manual Part 4
Solutions to Chapter 8 Exercises UNSOLVED EXERCISES U1. (a) Jack’s expected utility is 0.5 • √250,000 + 0.5 • √90,000 = 400. (d) Under the agreement, the expected utility for each participant is 0.25 • √250,000 + 0.25 • √170,000 […]
978-0393919684 Chapter 9 Lecture Note Part 1
CHAPTER 9 Strategic Moves Teaching Suggestions The ideas in this chapter can be brought to life and the students can better appreciate the subtleties of various strategic moves and their credibility if you hold classroom discussions based on situations where […]
978-0393919684 Chapter 9 Lecture Note Part 2
DEADLINES If the location is one where the authorities control the food and water supply, and the terrorists have limited numbers, time is on the government’s side. Then the authorities may simply seal the place, prevent media coverage, and wait […]
978-0393919684 Chapter 9 Solution Manual
Solutions to Chapter 9 Exercises SOLVED EXERCISES S1. The statement is true because promises, when successfully used as strategic moves, require that you follow through on the promised action; you will not promise an arbitrarily large reward. You may S2. […]