Question

Part A: True, False, Why Questions 1 through 5 (1) Say that we are looking at a two player normal form game which represents a situ ation in which both players make their choices simultaneously. It is possible for Normal Form Rationalizability and Extensive Form Rationalizability to make different predictions for this game (2) A rational agent will not play a weakly dominated strategy. (3) A Nash equilibrium of the stage game must be played in every period of a SGPNE of FINITELY repeated game. (4) The iterated deletion of weakly dominated strategies is an order independent procedure. (5) In an alternating offers bargaining game, the agent who makes the first offer always gets a larger share of the pie.

Answer 1

(1) Say that we are looking at a two player normal form game which represent situation in which both players make there chooses  simultaneously. It is possible) or Norma Form ....ability and Extensive Form Rationalizablity to make chffermt diiffrent prediction for this game

ANS.......

TRUE

A rationalizable equilibrium is not always a Nash equilibrium but a Nash equilibrium is always one. Since the predictions from extensive from game about the Nash equilibrium can be different from the normal form game; the normal form rationalizability and extensive form rationalizability can make different predictions for the game.

(2)A rational agent winnot ploy a weakly dominated strategy

ANS.......

TRUE

Given the option of playing a weakly dominant strategy and that leading to Nash equilibrium, a rational agent would always choose the later.

(3) A Nash equal .= of the stage game must be played in every period of a SPINE of a FINITELY repeated game.

ANS.......

TRUE

The Nash equilibrium of the stage game will be the only choice of players in the SGPNE as that will be the most optimum choice of players and there is no incentive to deviate from that choice as it leads to no benefit to both in a finitely repeated game.

(4) The iterated deletion, weakly dominated strategies is an order indepaule n procedure

ANS.......

FALSE

the iterated deletion of weakly dominant strategies is order dependent as the way we delete strategies leads us to different outputs in the end. Choosing A deletion over B in the first step leads to different output in the end.

(5 ) In an alternating o)shwgaining game, the agent who makes thefirst cif er always gets a f the Pk

ANS.......

FALSE

In some conditions, the player making an offer keeps a smaller share of the pie for the other person to accept the offer so as to make him accept the offer today.