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    HUL 320 Assignment

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    HUL 320 Assignment

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    HUL 320 Assignment

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    kk ss

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    HUL 320: Assignment

    April 12, 2024

    1. Each of two players receives a ticket on which there is a number in some


    finite subset S of the interval [0, 1]. The number on a player’s ticket is the
    size of a prize that he may receive. The two prizes are identically and
    independently distributed, with distribution function F . Each player is
    asked independently and simultaneously whether he wants to exchange
    his prize for the other player’s prize. If both players agree then the prizes
    are exchanged; otherwise each player receives his own prize. Each player’s
    objective is to maximize his expected payoff. Model this situation as a
    Bayesian game and show that in any Nash equilibrium the highest prize
    that either player is willing to exchange is the smallest possible prize.

    2. Armies 1 and 2 are fighting over an island initially held by a battalion


    of army 2. Army 1 has K battalions and army 2 has L. Whenever the
    island is occupied by one army the opposing army can launch an attack.
    The outcome of the attack is that the occupying battalion and one of the
    attacking battalions are destroyed; the attacking army wins and, so long
    as it has battalions left, occupies the island with one battalion. The com-
    mander of each army is interested in maximizing the number of surviving
    battalions but also regards the occupation of the island as worth more
    than one battalion but less than two. (If, after an attack, neither army
    has any battalions left, then the payoff of each commander is 0.) Ana-
    lyze this situation as an extensive game and, using the notion of subgame
    perfect equilibrium, predict the winner as a function of K and L.

    3. Two players are bargaining over 1 unit of money. They will bargain for
    T + 1 periods starting from period 0. In even periods (starting at 0),
    Player 1 offers a split (ot , 1 − ot ), where ot ∈ [0, 1] is Player 1’s share. If
    Player 2 accepts, the game ends. Else, we move to the next period. In
    odd periods, Player 2 offers a split. If no split is accepted at the end of
    period T , then the game ends with each player getting 0. Money received
    in period t is discounted by δ t t, where δ ∈ (0, 1). Find the subgame
    perfect equilibrium of this game.
    4. Consider the game form in Figure 1. Find the behavioral strategy of player
    1 that is equivalent to her mixed strategy in which she plays (B, r) with

    1
    probability 0.4, (B, l‘) with probability 0.1, and (A, l) with probability 0.5.

    Figure 1:

    5. Formulate the following parlor game as an extensive game with imperfect


    information. First player 1 receives a card that is either H or L with equal
    probabilities. Player 2 does not see the card. Player 1 may announce that
    her card is L, in which case she must pay 1 dollar to player 2, or may
    claim that her card is H, in which case player 2 may choose to concede or
    to insist on seeing player 1’s card. If player 2 concedes then he must pay
    1 dollar to player 1. If he insists on seeing player 1′ s card then player 1
    must pay him 4 dollars if her card is L and he must pay her 4 dollars if
    her card is H. Find the Nash equilibria of this game. Also, represent the
    game through a tree diagram.

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