There are three players. Each player is given an unmarked envelope and asked to put in it either nothing or 3 of his own money or 6 of his own money. A referee collects the envelopes, opens them, gathers all the money and then doubles the amount (using his own money) and divides the total into three equal parts which he then distributes to the players. For example, if Players 1 and 2 put nothing and Player 3 puts 2 6, then the referee adds another 6 so that the total becomes 12, divides this sum into three equal parts and gives 4 to each player. Each player is selfish and greedy, in the sense that he ranks the outcomes exclusively in terms of his net change in wealth (what he gets from the referee minus what he contributed). (a) Describe this game by means of a set of matrices. (Hints: Note that we can represent a three player game with a set of matrices: Player 1 chooses the row, Player 2 chooses the column and Player 3 chooses the matrix (that is, we label the rows with Player 1's strategies, the columns with Player 2's strategies and the tables with Player 3's strategies)). (b) Find the Nash equilibria of the above game.
There are three players. Each player is given an unmarked envelope and asked to put in it either nothing or 3 of his own money or 6 of his own money. A referee collects the envelopes, opens them, gathers all the money and then doubles the amount (using his own money) and divides the total into three equal parts which he then distributes to the players. For example, if Players 1 and 2 put nothing and Player 3 puts 2 6, then the referee adds another 6 so that the total becomes 12, divides this sum into three equal parts and gives 4 to each player. Each player is selfish and greedy, in the sense that he ranks the outcomes exclusively in terms of his net change in wealth (what he gets from the referee minus what he contributed). (a) Describe this game by means of a set of matrices. (Hints: Note that we can represent a three player game with a set of matrices: Player 1 chooses the row, Player 2 chooses the column and Player 3 chooses the matrix (that is, we label the rows with Player 1's strategies, the columns with Player 2's strategies and the tables with Player 3's strategies)). (b) Find the Nash equilibria of the above game.
Chapter7: Uncertainty
Section: Chapter Questions
Problem 7.15P
Related questions
Question
Please give step by step answer and take a like
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning