Question

Question 1 (15 polnts) Consider the following simultaneous-move game Player 2 ILIR T15. 2 | 2,0 B 3,30, 5 A. Find the pure-strategy Nash equilibrium of this game. Player M B. Can player 2 help himself by employing a simple unconditional strategie move? If so, what action will player 2 choose to commit to? What are the players' new payoffs? C. Answer the following question only if your were not able to find an unconditional strategic move. Can player 2 help himself by using a conditional strategic move? If so, what will it be? Indicate the new payoffs

Answer 1

A.

P, 2- 5,2 2,0 | |0,5 3, 3 T,L) ù the NE (pure shrar

B.

An unconditional strategic move is a strategy or action that influences the beliefs or actions of the other players in a favorable way. It should be analyzed sequentially. Player 2 knows that T strictly dominates B for player 1 so player 1 would never choose B. Given that, player 2 would always choose L (as L strictly dominates R). There is no unconditional strategic move that makes player 2 better off. The payoff would remain (5,2).

C.

Player 2 cannot help himself using a conditional strategic move either. If he chooses L, player 1 chooses T. If he chooses R, Player 1 chooses M and he gets a lesser payoff than the pure strategy NE.