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Expected utility

Expected utility

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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2. Consider the strategic-form game below: P2 L R A 0, 10 8, 15 P1 8, 8 0, 5 C 1, 3 6, 12 2.1. Let m, be a mixed strategy for P1 (m,(A), m, (B)) = (p, 1 – p). Note that m, (C) = 0. Furthermore, assume P2 is playing a mixed strategy with (m2 (L),m2 (R)) = (q, 1 – q). Write an expression for u1(m1,m2) in terms of p and q. 2.2. Write an expression for u1 (C,m-¡), the expected utility to P1 playing C when P2 is playing a mixed strategy. 2.3. Notice that neither pure stra mixed strategies that obtain a strictly higher payoff for P1 than C when P2 plays L and when P2 plays R. A nor B strictly dominates C. Show that there are A-B-
Transcribed Image Text:2. Consider the strategic-form game below: P2 L R A 0, 10 8, 15 P1 8, 8 0, 5 C 1, 3 6, 12 2.1. Let m, be a mixed strategy for P1 (m,(A), m, (B)) = (p, 1 – p). Note that m, (C) = 0. Furthermore, assume P2 is playing a mixed strategy with (m2 (L),m2 (R)) = (q, 1 – q). Write an expression for u1(m1,m2) in terms of p and q. 2.2. Write an expression for u1 (C,m-¡), the expected utility to P1 playing C when P2 is playing a mixed strategy. 2.3. Notice that neither pure stra mixed strategies that obtain a strictly higher payoff for P1 than C when P2 plays L and when P2 plays R. A nor B strictly dominates C. Show that there are A-B-
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