Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4. Consider the following (and by now quite familiar) Bos game : B S B 2,1 0,0 S 0,0 1,2 Recall that this game has

image text in transcribed
4. Consider the following (and by now quite familiar) Bos game : B S B 2,1 0,0 S 0,0 1,2 Recall that this game has three Nash Equilibria : (B,S), (S,B), and the mixed strategy equilibrium where 1 plays B with probability 2/3 and 2 plays B with probability 1/3. Now consider the following alternative game for some &> 0, which we will call the E-perturbation of the original game : B S B 2+En1,1+En2 En 1,0 S 0,En2 1,2 Where, for i = 1,2, nis distributed according to CDF GF(n;) and its realization is privately known by player i. (a) Suppose there exists a Bayesian equilibrium in the &-perturbed game that take the form "Player i plays B if and only if nin* "; find an expression for 17i and 172. (Hint : this expression should involve the CDFs GF) and verify that this is indeed a Bayes-Nash Equilibrium. (b) ShowthatwecanchooseGE suchthat, whengoestozero, theBayesianNashequilibriumdescribed above gives the same strategies as in the strictly mixed strategy Nash Equilibrium of the original game. (This is an application of Harsanyi's "purification theorem", which states that every mixed strategy Nash equilibrium can be obtained as the limit of pure strategy Bayes Nash equilibria of some perturbed game.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Commercial Fishing On The Outer Banks

Authors: R Wayne Gray, Nancy Beach Gray

1st Edition

1439667055, 9781439667057

More Books

Students also viewed these Economics questions