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Consider the following 2-person static game with three strategies for each player. The payoff matrix shown below represents this game. Player 2 Left Center
Consider the following 2-person static game with three strategies for each player. The payoff matrix shown below represents this game. Player 2 Left Center Right Top 100,100 30,150 -40,90 Player 1 Middle 150,30 50,50 5,60 Bottom 90,-40 60,5 10,10 a. Identify if there is a strictly dominated strategy for each player; namely, can you find a pair of strategies si, s, such that the payoffs for player & from following s; are strictly worse than from s for every possible strategy choice of player j? b. Based on common knowledge of rationality - the fact that everyone is rational, and everyone knows everyone is rational, etc. - we can eliminate strictly dominated strategies. Do it, and represent the resulting game in a 2 x 2 matrix. c. Identify if there is a strictly dominant strategy equilibrium. Is this also a Nash equilibrium?
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