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Hi, Can you solve these two questions with steps? Thank you. 1. Consider the following twoplayer game: L M N R. UOUU> (a) Compute the
Hi,
Can you solve these two questions with steps?
Thank you.
1. Consider the following twoplayer game: L M N R. UOUU> (a) Compute the set of rationalizable strategies. It is enough to write down the matrix that survives iterated deletion of strictly dominated strategies (20 pts) (b) Please explain how you eliminate a strategy and explain the assumptions on ra tionality and (higherorder) knowledge of rationality for each elimination (10 pts). 2. Three game theorists work on a team project. Assume they work independently, and it is not possible for them to monitor each other. No one likes working, and the cost of efforts is measured in dollars. Each player can work up to 5 hours, and the cost per working hour is $6. The quality and hence the prot of the project is determined by the joint efforts (total number of working hours) of the three players. For each additional hour that the team invests in the project, up to 10 hours, the total prot will increase by $15. After 10 hours, efforts will not increase prots. Assume players divide the prot equally among them. Hence, each player's payoff is his share of the prot minus his cost. There is common knowledge of rationality. (a What is the strategy space (the set of strategies) for each player? (10 pts) J (b) What is the payoff for each player as a function of the strategy proles? (10 pts) (c) Compute the set of rationalizable effort levels for each player. (10 pts) J (d Suppose one player is kicked out of the team, and the remaining two players still share the prot equally. Compute the set of rationalizable effort levels. (10 pts)Step by Step Solution
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