Assignment 3
1. Some games of strategy are cooperative. One example is deciding which side of the road to drive on. It doesn’t matter which side it is as long as everyone chooses the same side. Otherwise, everyone may get hurt.
Driver 2
Left Right
Driver 1 Left 0,0 -1000 –1000
Right -1000, -1000 0,0
a)Does either player have a dominant strategy? Explain.
SAMPLE ANSWER:
Both Player have dominant strategy. In this case there are two pure strategy Nash equilibria, when both choose to either drive on the left or on the right. If we admit mixed strategies (where a pure strategy is chosen at random, subject to some fixed probability), then there are three Nash equilibria for the same case:
b)Is there Nash equilibrium in this game? Explain
c)Why this game is called a cooperative game?
2.
a. What is the firm’s Total Revenue?
b. What is the Total Cost?
c. What is the firm’s Total Profits?
d. If the above monopolist were to behave like a perfectly competitive firm (operating in the long run), determine its output.
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