Sub: Economics Topic: Micro Economics

Question:

Optimal strategy and equilibrium pay off for simultaneous-move one-shot

game

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Use the following payoff matrix for a simultaneous-move one-shot game to answer the
accompanying questions.

Player 2

Strategy C D E F
A 25, 15 4, 20 16, 14 28, 12
Player 1 B 10, 10 5, 15 8, 6 18, 13

a. What is player 1’s optimal strategy? Why?

b. Determine player 1.s equilibrium payoff.

Solution:

Player 2

Player1 C D E F

Strategy
A 25, 15 4, 20 16, 14 28, 12
B 10, 10 5, 15 8, 6 18, 13

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 Sub: Economics Topic: Micro Economics

A sequential game is a game where one player chooses his action before the others choose
theirs. Importantly, the later players must have some information of the first's choice.

1. What is player 1’s optimal strategy? Why?

The Player1’s optimal strategy is A, because he is getting higher pay off when he is choosing A
Strategy compared to B Strategy

1. Determine player 1.s equilibrium payoff.

The Player1’s equilibrium payoff would be 28.

** End of the Solution **

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*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting the same in
lieu of your academic submissions for grades.