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There are 36 students, each to choose a real number between 0 and 100, aiming to guess the others' average deflated D=70% of the others'
There are 36 students, each to choose a real number between 0 and 100, aiming to guess the others' average deflated D=70% of the others' average choice. Specifically, let be student i's choice and a; = (2jxis;)/35, then the payoff is up(s)=100 (s; -.7a.;)?. Note, given a.;, this is at most 100, and exactly 100 when s;= .7a.j. In words, a strategy pays off less the more distant it is from the deflated average.7a.j. Exercise: Compute the rationalizable strategies. Hints: (i) Compute player is best response to the belief other players play aj. (ii) Then vary the beliefs, from one extreme to another, to compute the set B; . (iii) Then proceed deleting strategies not in Bi. (iv) Then in the game with the reduced strategy sets (following deletions), apply recomputed B;, and delete any strategies outside it. (v) Iterate ... There are 36 students, each to choose a real number between 0 and 100, aiming to guess the others' average deflated D=70% of the others' average choice. Specifically, let be student i's choice and a; = (2jxis;)/35, then the payoff is up(s)=100 (s; -.7a.;)?. Note, given a.;, this is at most 100, and exactly 100 when s;= .7a.j. In words, a strategy pays off less the more distant it is from the deflated average.7a.j. Exercise: Compute the rationalizable strategies. Hints: (i) Compute player is best response to the belief other players play aj. (ii) Then vary the beliefs, from one extreme to another, to compute the set B; . (iii) Then proceed deleting strategies not in Bi. (iv) Then in the game with the reduced strategy sets (following deletions), apply recomputed B;, and delete any strategies outside it. (v) Iterate
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