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Exercise 2. Voting Voters in Suburbia are choosing between two candidates, L and R. L is proposing new infras- tructure funded with new taxes. Candidate

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Exercise 2. Voting Voters in Suburbia are choosing between two candidates, L and R. L is proposing new infras- tructure funded with new taxes. Candidate R is in favour of preserving the status quo, i.e., no new taxes and no new spending. Consider three voters - Alison, Beth, and Chandra - whose preferences and payoff are as follows. . Alison strictly prefers L to R. She gets a payoff of 2 if L wins but 0 otherwise. . Beth strictly prefers R to L. She gets a payoff of 2 if R wins but 0 otherwise. . Chandra is not interested in electoral politics. Nonetheless voting is compulsory in Suburbia so he always votes. He gets 0 if the candidate he votes for wins. Otherwise, his payoff is -1. All three individuals - Alison, Beth, and Chandra - vote. Candidates receiving majority of the votes wins. (i) Write down the 3-person normal form game where Alison, Beth, and Chandra are three players and each of them has two strategies - vote for L or vote for R. As described above, their payoffs depend on the outcome of the election. (ii) Find out all Nash equilibria in pure strategies. (iii) Suppose we are interested in Nash equilibria where neither strictly nor weakly domi- nated strategies are played. A Nash equilibrium satisfying this property is called ad- missible. Are all Nash equilibria in (ii) admissible

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