10:55 AM Thu Nov 11 z\" PROB7.pdf 1. Veto Points (adapted from Grant). Suppose (to simplify) that congress has just one house and that it is controlled by the Democrats. Suppose that the President is a Republican. And suppose that the Democratic majority in congress is not enough to overturn a veto. There are two proposals being considered for a bill to help out the airline industry. Proposal A is to give $10 Billion to the airlines with no strings attached. Proposal B is to give $10 Billion to the airlines on the condition that this $10 Billion must be spent on payroll. The bill could contain only proposal A, only proposal B, or both proposals (i.e., $20 Billion with half of it having to be spent on payroll). It is also possible for no bill to be passed into law, either because congress could pass nothing, or because the president could veto. The order of preferences is as follows, where 4 is the best and 1 is the worst. The moves in this game are as follows. First, congress decides whether to pass a bill containing proposal A, or proposal B, or both, or not to pass a bill at all. Then the president decides whether or not to veto. If the president vetoes or if congress decides not to pass a bill at all, then neither A nor B occur. (a) Draw a tree for this game, nd the backward outcome and write down the corresponding backward induction strategies. (You do not need to draw a matrix of write down all of the strategies that are not consistent with backward induction.) (b) Find at least one other Nash equilibrium of the game. (Again, you need not write down the matrix.) Argue whether or not such an equilibrium is plausible. Now suppose that the president is given the power of a line-item veto. That is, if congress passes a. bill with both proposals, the president can veto just one of them, allowing the other to pass. (He can still veto the entire bill or not veto at all if he so chooses.) (c) Draw a tree for this new game, nd the backward outcome and write down the corresponding backward induction strategies. (Again, you do not need to draw a matrix of write down all of the strategies that are not consistent with backward induction.) ((1) Suppose that prior to congress considering this bill, the president can suspend his power of line-item veto just for this one piece of legislation. Explain whether or not the president will do so. 2. \"Not Survivor\". [This question was on the 2001 nal exam] Six former 159a students Ann, Bob, Carl, Dora, Ed, and Fran are the contestants in a new \"real TV\" show. They are placed on an island. The rules of the game are as follows. Ann goes rst. She is given a bag that everyone knows contains six gold coins. Ann makes a proposal of how to allocate the six coins among the six contestants including herself. The contestants (including Ann) then vote 'yes' or 'no' on the proposal. If the proposal gets more than half the votes then the coins are allocated according to the proposal and everyone leaves the island. If the proposal _. -5 (a Dashboard Calendar E To Do Q Notifications E Inbox