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#1 - ECON ASSIGN 4 1. Consider the following voting game. There are three different proposals, A, B and C. The three voters have preferences given in the following table. VI V2 V3 most preferred |A B C middle BCA least preferred AB The utility of a voter if his most preferred outcome wins is 2, if his second most preferred outcome wins it is 1, and if his least preferred outcome wins, it is 0. The voting rules are as follows: Every individual casts one vote. If two or three individuals agree on one proposal, that proposal has won. Otherwise (ie. if there is one vote for each proposal, respectively), Voter I's vote is decisive. (a) Show that (A, A, A) is a Nash equilibrium. (b) There are also many other Nash equilibria. One concept that can be used to narrow down the number of equilibria is to require that voters should not play weakly dominated strategies. What are the weakly dominated strategies in the original game? Justify your answer. (c) There is a unique Nash equilibrium that survives iterated elimination of weakly dominated strategies. Find it, and comment on the outcome

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