Exercise 1.1. Antonia and Bob cannot decide where to go to dinner. Antonia proposes the following procedure: Antonia will write on a piece of paper either the number 2 or the number 4 or the number 6, while Bob will write on his piece of paper either the number 1 or 3 or 5. They will write their numbers secretly and independently. They then will show each other what they wrote and choose a restaurant according to the following rule: if the sum of the two numbers is 5 or less, they will go to a Mexican restaurant, if the sum is 7 they will go to an Italian restaurant and if the number is 9 or more they will go to a Japanese restaurant. (a) Let Antonia be Player 1 and Bob Player 2. Represent this situation as a game frame, first by writing out each element of the quadruple of Definition 1.1 and then by using a table (label the rows with Antonia's strategies and the columns with Bob's strategies, so that we can think of Antonia as choosing the row and Bob as choosing the column). (b) Suppose that Antonia and Bob have the following preferences (where M stands for 'Mexican', / for 'Italian' and ✓ for 'Japanese). For Antonia: I> J; for Bob: M> Antonia Antonia Bob M Bob J. Using utility function with values 1, 2 and 3 represent the corresponding reduced-form game as a table. Exercise 1.2. Consider the following two-player game-frame where each player is given a set of cards and each card has a number on it. The players are Antonia (Player 1) and Bob (Player 2). Antonia's cards have the following numbers (one number on each card): 2, 4 and 6, whereas Bob's cards are marked 0, 1 and 2 (thus different numbers from the previous exercise). Antonia chooses one of hers own cards and Bob chooses one of his own cards: this is done without knowing the other player's choice. The outcome depends on the sum of the points of the chosen cards, as follows. If the sum of points on the two chosen cards is greater than or equal to 5, Antonia gets $10 minus that sum; otherwise (that is, if the sum is less than 5) she gets nothing; furthermore, if the sum of points is an odd number, Bob gets as many dollars as that sum; if the sum of points turns out to be an even number and is less than or equal to 6, Bob gets $2; otherwise he gets nothing. (a) Represent the game-frame described above by means of a table. As in the previous exercise, assign the rows to Antonia and the columns to Bob. (b) Using the game-frame of part (a) obtain a reduced-form game by adding the information that each player is selfish and greedy. This means that each player only cares about how much money he/she gets and prefers more money to less.