Game Theory (MID-TERM) 24-11-2016

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Exercise 1
( 2+1+2+3 )
 
a 3 11
Given the zero sum game:  6 5 1  ,
1 0 b

1. find the conservative values (in pure strategies) of the game;

2. find if there is any equilibrium in pure strategies;

1
3. solve the game if b = 2 and a ≥ 7.

4. solve the game if b = 13 and a ≥ 7.

Solution

3
 if a > 3
1. The conservative values in pure strategies are vI = a if 1 ≤ a ≤ 3 vII = 5 ∀a, b.

1 if a < 1


2. Since vI 6= vII for any value of a and b, there is no equilibrium in pure strategies.
1
3. If b = and a ≥ 7 the third row is dominated by the second one and the first column is dominated
2  
3 11
by the second one. The game is reduced to , and we can find the equilibrium in mixed
5 1
strategies using the indifference principle:
1
3p + 5(1 − p) = 11p + (1 − p) =⇒ p =
3
5
3q + 11(1 − q) = 5q + (1 − q) =⇒ q = .
6
The unique equilibrium is therefore {(0, 13 , 23 ), ( 56 , 16 , 0)} and the value of the game is v = 13
3 .

4. If b = 13 and a ≥ 7 the first column is still dominated by the second one. Thus, the game is reduced
to  
3 11
 5 1 .
0 13
By using the graphical representations (see Figure (a)), we note that the third row is never played at
the equilibrium, so the solution is the same as in the previous point: {(0, 13 , 23 ), ( 56 , 16 , 0)} and the value
of the game is v = 133 .
 2−x

v 1 q
x−2 2x − 5 5 − 2x

(a) Exercise 1.4

(b) Exercise 2.3

Exercise 2
( 2+2+2+2 )

Let (N, v) be the a TU-game where N = {1, 2, 3}, v({1}) = v({2}) = 2, v({3}) = 0, v({1, 2}) = a,
v({1, 3}) = v({2, 3}) = 3, v(N ) = 5, where a is a positive real number.

1. Find a such that the core is non empty.

2. For those values of a compute the core of the game.

3. Find the nucleolus for a = 5.

4. Find the Shapley value of the game, for every value of a.

Solution

1. A vector (x1 , x2 , x3 ) is in the core if x1 + x2 + x3 = 5, x1 ≥ 2, x2 ≥ 2, x3 ≥ 0 and x1 + x2 ≥

a, x1 + x3 ≥ 3, x2 + x3 ≥ 3. From these conditions we find x1 = 2, x2 = 2 and 0 ≤ x3 = 1 ≤ a − 5.
The core is therefore non empty if and only if a ≤ 4.

2. For a ≤ 4, the core is the singleton (2, 2, 1).

3. If a = 5 the core is empty, the nucleolus does not belong to the core and it can be computed directly.
Since player 1 and 2 are symmetric and the nucleolus is an imputation (it satisfies efficiency), it will
be of the form (x, x, 5 − 2x) for some x. The excesses of the coalitions are:

e{1} = e{2} = 2 − x e{3} = 2x − 5

e{1,3} = e{2,3} = x − 2 e{1,2} = 5 − 2x

The excesses can be represented as lines (see Figure (b)) and the allocation that minimizes the maxi-
mum excess is found by the intersection of the lines e = 5 − 2x and e = x − 2, thus the nucleolus is
ν(v) = ( 73 , 73 , 31 ).

4. The Shapley value is ( a+9 a+9 6−a

6 , 6 , 3 )
 Exercise 3
( 6+3 )

1. Consider the following game in strategic form:

 
(3, 1) (1, 1)
 (2, 1) (2, 2) 
(3, 1) (1, 0)

(a) Is the strategy profile {(0, 1, 0), ( 13 , 23 )} a Nash equilibrium? Why?

(b) And what about {( 31 , 0, 23 ), (1, 0)}? Why?
(c) Find all the correlated equilibria of the form:
 
a 0
 0 b 
c 0

(d) Is it possible to solve the previous point without writing the incentive constraint inequalities?
Why?

2. Consider the Nim game with starting position (8, x, 4).

(a) Is there x such that the starting position is a P-position?

(b) For x = 9 say what is a winning move of the first player at the first stage

Solution

1. (a) No, it is not a Nash equilibrium because BRII [(0, 1, 0)] = (0, 1) 6= ( 13 , 23 ).
(b) Yes, it is a Nash equilibrium because BRI [(1, 0)] = (p, 0, 1 − p) (player I is indifferent between
the first and the third row and he gets more from the first row than from the second one) and
BRII [( 13 , 0, 32 )] = (1, 0) (player II gets 1 from the first column and 13 from the second column).
(c) Any probability distribution is a correlated equilibrium of this form. (i.e. any a, b, c ∈ [0, 1] :
a + b + c = 1)
(d) There are three Nash equilibria in pure strategies, with outcomes (3, 1), (2, 2) and (3, 1). These
equilibria correspond to the correlated equilibria of the form in the matrix with, respectively,
a = 1, b = c = 0; b = 1, a = c = 0 and c = 1, a = b = 0. Moreover, since the set of
correlated equilibria is convex, any convex combination of these three equilibria is still a correlated
equilibrium and the previous result follows.

2. If x = 12 the nim-sum is equal to zero and (8, x, 4) is a P-position, i.e. the second player has a winning
strategy).
If x = 9 the first player has only one winning move that is taking 3 chips from the last pile.
 First Question (4 points)
Explain how to find optimal strategies and the value in zero sum games by using Linear Programming

Second Question (4 points)

Prove existence of Nash equilibria in finite games (in mixed strategies).
 Game Theory (5 CFU) 01-02-2017

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Exercise 1
( 1+2+3+3 )

Given the folllowing bimatrix, with a, b ∈ R:

 
(2, 1) (1, 3) (4, a)
 (1, 0) (2, 1) (0, 2)  ,
(b, 3) (0, 0) (3, 2)

1. find the Nash equilibria in pure strategies for different values of a, b ∈ R;

2. find the best reply of the second player to the strategy x = ( 14 , 34 , 0) of the first player;

3. find for which values of a, b ∈ R, x is part of a Nash equilibrium;

4. find all the Nash equilibria for a = 2 and b = 1.

Solution

1. The Nash equilibria in pure strategies are (4, a) if a ≥ 3 and (b, 3) if b ≥ 2.

2. If Player I plays x, then for each of her pure strategies the expected outcome of II are:
1 6 a+6
EII [x, (1, 0, 0)] = EII [x, (0, 1, 0)] = EII [x, (0, 0, 1)] =
4 4 4
Thus, 
(0, 1, 0)
 if a < 0
BRII = (0, q, 1 − q) if a = 0

(0, 0, 1) if a > 0


3. If a < 0, x is not part of a Nash equilibrium since BRII (x) = (0, 1, 0) but BRI (0, 1, 0) = (0, 1, 0).
If a > 0, x is not part of a Nash equilibrium since BRII (x) = (0, 0, 1) but BRI (0, 0, 1) = (1, 0, 0).
If a = 0, x is part of a Nash equilibrium if and only if BRI (0, q, 1 − q) = x. So the first player should
be indifferent among the first and the second row, and he should get more from these rows than from
the third one:
4
q + 4(1 − q) = 2q ≥ 3(1 − q) =⇒ q =
5
x is part of a Nash equilibrium for any value of b and if a = 0, the second player plays (0, 54 , 15 ).

4. If a = 2 and b = 1 the third row is dominated by the first one, then the first column is dominated by
the second. Thus, the game is reduced to
 
(1, 3) (4, a)
,
(2, 1) (0, 2)

and there are not equilibria in pure strategies. We can apply the indifference principle: 3p + 1 − p =
2 q + 4(1 − q) = 2q and get the Nash equilibrium: {(0, 21 , 21 ), (0, 45 , 15 )}.
 Exercise 2
( 1+2+2+2 )

Let (N, v) be the a TU-game where N = {1, 2, 3} and v(S) = max{i : i ∈ S}

1. Is there any null player?

2. Find the core of the game.

3. Find the Shapley value of the game.

4. Find the Banzhaf value of the game

Solution

1. A player i is a null player iff v(S ∪ i) = v(S) for any S. If we take S = ∅, there is not a player such
that v(i) = 0, so there is no null player.

2. The core of the game is empty. The constraints for finding the core are

x1 ≥ 1
 x2 ≥ 2 x3 ≥ 3
x1 + x2 ≥ 2 x2 + x3 ≥ 3 x1 + x3 ≥ 3

x1 + x2 + x3 = 3


but they are incompatible (for instance: x1 ≥ 1 x2 ≥ 2 x3 ≥ 3 and x1 + x2 + x3 = 1)-

3. The Shapley value is

1 1 1 1 1
σ1 (v) = (1 − 0) + (2 − 2) + (3 − 3) + (3 − 3) =
6 3 3 6 3
1 1 1 1 5
σ2 (v) = (2 − 0) + (2 − 1) + (3 − 3) + (3 − 3) =
6 3 3 6 6
1 1 1 1 11
σ3 (v) = (3 − 0) + (3 − 1) + (3 − 2) + (3 − 2) =
6 3 3 6 6

4. The Banzhaf value is

1 3 7
β=( , , )
4 4 4
.
 Exercise 3
( 3+6 )

1. Solve the following zero sum game for a < 3:

 
2 a
 4 2 .
2 3

2. Consider the following game in extensive form.

a b
II
(3,0)
c d
I
(0,3)
e f

(2,0) (x,3)

(a) Enumerate the strategies of the two players;

(b) find for which values of x the backward induction selects a unique rational outcome;
(c) is there any value of x such that {bf, c} is an optimal strategy?

Solution

1. If the second player plays (q, 1 − q) the expected payoff of the first player are represented in the
following figure. The second player will choose q that minimize the maximum value of the game, thus

1 q

if a < 3 the firstrow is not played at the equilibrium. We can apply the indifference principle to get
the equilibrium (0, 13 , 32 ), ( 13 , 32 ) .

2. The strategies of the two players are {ae, af, be, bf } and {c, d}.
There is a unique rational outcome if x < 2: player I chooses e in the last node, then II chooses d and
then I chooses b. The optimal strategies are {be, c} and the outcome is (3, 0).
If x ≥ 2 player I chooses f in the last node, then player II is indifferent between c and d, if II chooses
c, then player I chooses b if x ≤ 3. Then, if 2 ≤ x ≤ 3, {bf, c} are optimal strategies.
 First Question (4 points)
Explain the concept of optimal solution in a zero sum game. Prove that any optimal solution provides a
Nash equilibrium profile.

Second Question (4 points)

What is backward induction? Explain in which kind of games it can be applied and provide an example.
 Game Theory (5 CFU) 21-02-2017

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Exercise 1
( 2+3+3 )

Given the following zero sum game:  

5 a 2
,
b 5 3
1. for b = 4, prove that player II has a unique optimal strategy for every a ≥ 0;

2. find the optimal strategies of the players for a ≥ 0, b = 1;

3. find the optimal strategies of the players for a ≥ 0, b = 3.

Solution

1. If b = 4 the conservative values of the two players coincide (they are both equal to 3) and the game
has a unique equilibrium, in which player II plays the third column for every value of a ≥ 0.

2. If b = 1 the second column is not played at the equilibrium, applying the indifference principle we find
the equilibrium in mixed strategies {( 25 , 35 ), ( 45 , 0, 15 )}, the value of the game is 13
5 .

3. if b = 3 the second column is still not played at the equilibrium, but the first player plays the pure
strategy (0, 1). This means that if the second player plays (q, 0, 1 − q), player I gets more from the
second row than from the first:
1
5q + 2(1 − q) ≤ 3 =⇒ q ≤ .
3
The value of the game is 3 and all the equilibria of the game are given by {(0, 1)(q, 0, 1 − q)} with
q ∈ [0, 13 ].

a≥0

b=4 b=4
b=3 b=3

b=1 a≥0 b=1

1 p
 Exercise 2
( 2+2+2+2 )

Let k be a real number and (N, v) be the TU-game defined as follows: N = {1, . . . , n}, v(∅) = 0 and for
S ⊆ N , (S 6= ∅): 
2 if |S| ≤ 2
v(S) =
k otherwise.

1. If k = 4, for which values of n is the core empty?

2. Find and draw the core of the game for n = 3 and k = 7;

3. find the Banzhaf value of the game for n = 3 and every k;

4. find the Shapley value and the nucleolus of the game for every n and every k.

Solution

1. If k = 4 the core is empty for any value of n ≥ 2. Actually if n = 2 the conditions for a vector (x1 , x2 )
to be in the core are x1 ≥ 2, x2 ≥ 2 and x1 + x2 = 2 that are impossible. If n > 2, it is not possible to
find a vector (x1 , . . . , xn ) such that xi ≥ 2 for all i and x1 + x2 + · · · + xn = 4.

2. If n = 3 and k = 7, the core is generated by the extreme points (2, 2, 3), (3, 2, 2), (2, 3, 2).

(2, 2, 3)

(2, 3, 2) (3, 2, 2)

3. All players are symmetric, thus the Banzhaf value is the same for all of them:
1 k
βi (v) = [2 − 0 + 2 − 2 − +2 − 2 + k − 2] = .
4 4
Note that (if n > 2) v(S ∪ {i}) − v(S) 6= 0 iff S = ∅ or |S| = 2. Thus the Banzhaf value can be
computed as  
1 n−1
βi (v) = n−1 [2 + (k − 2)]
2 2
where n−1


2 is the number of coalition S such that |S| = 2 and i ∈
/ S.

4. Using efficiency and symmetry the Shapley value of the game and the nucleolus can be directly
computed as v(N )
n . So (
1 if n = 2
σi (v) = νi (v) = k
n if n > 2.
Using the explicit formula for n > 2, the Shapley value can be computed as
 
0!(n − 1)! n − 1 2!(n − 3)! k
σi (v) = (2 − 0) + [k − 2] = .
n! 2 n! n
 Exercise 3
( 4+3+2 )

1. Consider the Take-Away game, where the possible moves are to take away 1,2 or x chips. The last
player to move wins.

• Find x such that having 3 chips on the deck is a P-position and having 6 chips on the deck is an
N-position.
• For such value of x, find all the P-positions.
• Who wins if there are 23 chips?

2. Find the values of (a, b) such that the following game has an outcome determined by elimination of
strictly dominated strategies.  
(3, 3) (a, b) (4, 2)
 (2, 2) (6, 3) (3, 1) 
(5, 4) (7, 8) (6, 1)

3. For a = 7 and b = 5, find all the correlated equilibria of the previous game of the form:
 
0 x 0
 0 0 0 .
y z 0

Solution

1. If 3 is a P-position x 6= 3, then 4 and 5 are N-position and 6 is a N-position only if x = 6 (so that it
is possible to take 6 chips and win) or x = 3 (so that it is possible to take 3 chips and go to 3 that is
a P-position). Thus the solution is x = 6.
For this value, the P-position of the game are 3, 7, 10, 14, 17, . . . all the position in which the number
of chips is divisible by 7 or is equal to a multiple of 7 plus 3. That is k is a P-position iff k = 0 mod 7
or k = 3 mod 7.
Since 23 = 2 mod (7) it is a N-position and the first player has a winning strategy.

2. The second row is always dominated by the third one and the last column is always dominated by the
first one. Then if b ≥ 3 the second column dominates the first one and there is an equilibrium in pure
dominated strategies iff a 6= 7.
On the other hand, if a < 7 the last row dominates the first one and then (7,8) is the outcome
determined by the elimination of strictly dominated strategies.

3. If a = 7 and b = 5 there are two Nash equilibria in pure strategies corresponding to the outcome (a, b)
(that is (7,5)) and (7, 8); all the other outcomes are strictly dominated. A dominated strategy can
never be part of a correlated equilibrium, so the correlated equilibria of that form are
 
0 x 0
 0 0 0 ,
0 1−x 0

with 0 ≤ x ≤ 1.
 First Question (4 points)
Define and explain the idea of Nash equilibrium. Provide some example.

Second Question (4 points)

Prove that a strictly dominated row can never be used at a correlated equilibrium.
 Game Theory (5 CFU) 07-10-2017

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Exercise 1
( 2+3+4 )

Given the following bimatrix, with a, b ∈ R:

 
(a, b) (1, 2)
,
(2, 3) (4, 0)

1. find all Nash equilibria in pure strategies ∀a, b;

2. find all a, b such that {(1, 0), ( 12 , 21 )} is a Nash equilibrium;

3. prove that in such a case there are always infinite Nash equilibria.
 Exercise 2
( 2+2+4 )

Let (N, v) be the a TU-game where N = {1, 2, . . . , n}, v(∅) = 0 and

(
|S| − 1 if |S| is odd
v(S) =
|S| + 1 otherwise.

1. Find the Shapley value for all n;

2. find the nucleolus for all n;

3. for which n is the core of the game nonempty?

 Exercise 3
( 2+4+3 )

1. Find all n, m such that (3, n, 4, m) is a P-position in the Nim game.

2. Consider the following game in extensive form.

a b
II
(3,0)
c d
N
(0,2)
p 1-p

(2,6) (4,0)

(a) Write the game in strategic form and find all Nash equilibria;
(b) find the outcome(s) and the optimal strategies obtained by backward induction for all p ∈ [0, 1].

3. Find all correlated equilibria of the following bimatrix game:

 
(10, 3) (1, 4)
,
(9, 7) (0, 1)
 First Question (4 points)
Explain the concept of conservative values and of optimal strategies in a zero sum game.
 Second Question (4 points)
Explain the idea of N and P position in combinatorial games.
 Game Theory (Solutions) 07-20-2017

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Exercise 1
( 5+4 )

Given the folllowing bimatrix, with a, b ∈ R:

 
(a, b) (1, 2)
,
(2, 3) (4, 0)

1. find all Nash equilibria for a 6= 2, b 6= 2;

2. find all correlated equilibria for a 6= 2, b 6= 2

Solution
We have three different cases:

• If a < 2 thanks to the elimination of dominated strategies, the outcome is (2, 3). Thus, there is a
unique equilibrium in pure strategies: {(0, 1), (1, 0)} and a unique correlated equilibrium
 
0 0
.
1 0

• If a > 2 and b > 2 thanks to the elimination of dominated strategies, the outcome is (a, b). Thus,
there is a unique equilibrium in pure strategies: {(1, 0), (1, 0)} and a unique correlated equilibrium
 
1 0
.
0 0

• If a > 2 and b < 2 there is not an equilibrium in pure strategies. Using the indifference principle, we
3
find the unique equilibrium in mixed strategies: {( 5−b , 2−b 3 a−2
5−b ), ( a+1 , a+1 )}
Since there is only one equilibrium and it is in mixed strategies, there is only one correlated equilibrium
and it is the one associated to the equilibrium in mixed:
 
pq p(1 − q)
(1 − p)q (1 − p)(1 − q)
3 3
with p = 5−b and q = a+1 .
 Exercise 2
( 2+3+2+2 )

Let (N, v) be the a TU-game where N = {1, 2, 3}, v(∅) = 0 and

v(i) = 1 ∀i, v(1, 2) = v(1, 3) = 2, v(2, 3) = 4, v(N ) = a.

1. find a such that the game is superadditive;

2. find a such that the core of the game is nonempty and find the core for a = 5;

3. find the the nucleolus for a = 5;

4. find the Shapley value for any a.

Solution

1. The game is superadditive if for any S, T ∈ 2N such that S ∩ T = ∅ it holds v(S ∪ T ) ≥ v(S) + v(T ).
If we take S = {2, 3} and T = {1}, we find a ≥ 5. For these values of a the other inequalities are
satisfied, too.

2. The core of the game is given by vectors (x1 , x2 , x3 ) such that


1 ≤ x1 ≤ a − 4

1 ≤ x2 ≤ a − 2

1 ≤ x3 ≤ a − 2


The core is non empty if a ≥ 5. If a = 5 the core is the segment with extreme points (1, 1, 3) and
(1, 3, 1).

3. The nucleolus is in the core, players 2 and 3 are symmetric so their value should be the same. Thus,

ν(v) = (1, 2, 2)

4. The Shapley value is

a−2 a+1 a+1
σ(v) = ( , , )
3 3 3
 Exercise 3
( 3+2+3)

1. There is a pile of object on the table. Two players play consecutively and must take either three or
five objects. The player who is not allowed to move loses the game. Who wins if the objects are 7,
and if they are 2017?

2. Find the optimal strategies for players in the following zero sum game:
 
1 2 9
 3 2 1 .
4 3 8

3. (5 cfu) Given the following bimatrix game:

 
(3, 2) (1, 4)
,
(6, 1) (0, 0)

find all its correlated equilibria of of the form

 
0 a
.
b 0

4. (8 cfu) Three men (a, b, c) and three women (A, B, C). Preferences

A a B a C, A b B b C, A c B c C

a A b A c, b B a B c.
Find, if possible, preferences for C such that the men and women visiting algorithms end in the same
number of days.

Solution

1. The P-position are the ones in which there are k elements and k ≡ 0(8) or k ≡ 1(8) or k ≡ 2(8). If
there are 7 objects, the first player has a winning strategy (that is to take 5 objects); if there are 2017
objects left, since 2017 ≡ 1(8) this is a P-position so player 1 loses and player 2 has a winning strategy.

2. There is a unique equilibrium given by the elimination of dominated strategies. The optimal strategies
are {(0, 0, 1), (0, 1, 0)}.

3. (1, 4) and (6, 1) are pure Nash equilibria, so they correspond to two correlated equilibria with a =
1, b = 0 and a = 0, b = 1. Since the set of correlated equilibria is a convex and compact, we have a
correlated equilibrium
 0 k 
for any k ∈ [0, 1].
1−k 0

4. The men visiting algorithm ends in 3 days. If C has man c in the last position of her preferences also
the women visiting algorithm ends in 3 days.
First theoretical question (4 points)
Characterize the non-emptiness of the core for simple games.

Second Question (4 points)

(8 cfu) Describe the bargaining on one pie with alternating offers.
(5 cfu)The Nash theorem on existence of an equilibrium for strategic games.
 Game Theory (5 CFU) 09-04-2017

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Exercise 1
( 2+3+4 )

Consider the following bimatrix game:

 
(3, 3) (a, 4) (2, 1)
 (1, 4) (5, 0) (4, b)  ,
(2, 0) (3, 3) (3, 6)
where a, b are real numbers.

1. Find the Nash equilibrium profiles for all a, b in pure strategies;

2. Find the best reaction of the second player to the mixed strategy (p, 0, 1 − p) of the first player;

3. Find when (p, 0, 1 − p) is part of a Nash equilibrium profile as a strategy for the first player.

Exercise 2
( 3+3+3 )

Let (N, v) be the a TU-game where N = {1, 2, . . . , n}, v(∅) = 0 and

(
|S| + 1 if 1 ∈ S
v(S) =
|S| otherwise.

1. Find the Shapley value for every n;

2. find the core for every n;

3. find the nucleolus for every n.

 Exercise 3
( 3+2+3)

1. There is a pile of object on the table. Two players play consecutively and must take either two or six
objects. The player who is not allowed to move loses the game. Who wins if the objects are 7, and if
they are 2017?

2. Find the optimal strategies for players in the following zero sum game:
 
1 6 4
 0 2 8 .
2 1 3

3. Player 1 must choose x ∈ [0, 3], Player 2 (at the same time) must choose y ∈ [0, 3]. Their utility
functions are respectively u(x, y) = −x2 − xy + 3x, v(x, y) = −y 2 − xy + 3y. Find the optimal outcome
of the game

First Question (4 points)

Explain the concept of conservative values and of optimal strategies in a zero sum game.

Second Question (4 points)

Describe the Shapley value and its properties.