Question

Here is a simplified version of the game "Win an additional mark if U can!".

•There are two players.
•Each player names an integer between 1 and 4.
•The player who names the integer closest to two thirds of the average integer gets a reward of 10, the
other players get nothing.
•If there is a tie (i.e., choosing the same number), each player gets reward of 5.
(a) Represent this game in Normal Form. (b) Answer the following questions •When player 2 chooses 4, what are the best responses for player 1?
•When player 1 chooses 3, what are the best responses for player 2?
•When player 2 chooses 2, what are the best responses for player 1?
•When player 1 chooses 1, what are the best responses for player 2?
•For player 1, is the strategy of choosing 4 strictly or very weakly dominated by another strategy? If
so, which ones?
•For player 2, is the strategy of choosing 1 strictly or very weakly dominated by another strategy? If
so, which ones?
(c) What is the Nash equilibrium of this game? Find this out by applying the concept of dominated strategies to rule out a succession of inferior strategies
until only one choice remains.

Answer 1

(a) Here is the Normal Form representation of the game:

Player 2: 1 Player 2: 2 Player 2: 3 Player 2: 4

Player 1: 1 (5,5) (5,5) (0,10) (0,10)

Player 1: 2 (5,5) (2.5,2.5) (2.5,2.5) (0,10)

Player 1: 3 (10,0) (2.5,2.5) (2.5,2.5) (0,10)

Player 1: 4 (10,0) (10,0) (0,10) (0,10)

The first number in each cell represents the payoff for player 1, and the second number represents the payoff for player 2.

(b) •When player 2 chooses 4, player 1's best responses are 1 or 2, as they both lead to a payoff of 5. •When player 1 chooses 3, player 2's best response is to choose 3 as well, leading to a payoff of 2.5. •When player 2 chooses 2, player 1's best response is to choose 2 as well, leading to a payoff of 2.5. •When player 1 chooses 1, player 2's best responses are 1 or 2, as they both lead to a payoff of 5.

•For player 1, the strategy of choosing 4 is weakly dominated by the strategy of choosing 3. When player 1 chooses 3, they are guaranteed a payoff of at least 2.5, regardless of player 2's choice. When player 1 chooses 4, they can only get a payoff of 0 or 10, depending on player 2's choice.

•For player 2, the strategy of choosing 1 is strictly dominated by the strategy of choosing 2. If player 2 chooses 2, they are guaranteed a payoff of at least 2.5, regardless of player 1's choice. If player 2 chooses 1, they can only get a payoff of 5 or

Step-by-step explanation: