ECO316H1 Chapter : ch07_solutions_solved edit.doc
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Note that the statement will be true for zero-sum games, because when your opponent is indifferent in such a game, it must also be true that you are indifferent as well. (a) The game most resembles an assurance game because the two nash equiibria. S2 occur when both players play the same move. In an assurance game, both players prefer to make the same move, but there is also a preferred nash equilibrium with higher payoffs for both players. In this game, (risky, risky) is the preferred equilibrium because it has higher payoffs, but there is a chance that the players will play the worse nash equilibrium with lower payoffs. Even worse, the players might not play an equilibrium at all. Without convergence of expectations, these results can occur, and this is characteristic of an assurance game. (b) The two pure-strategy nash equilibria for this game are (risky, risky) and (safe,
