1. Lex E. Kahn and Thea Sorus are publishers. Lex can either
expand or hold constant the number of authors he has under contract. Thea can either
publisher her lead author's new book in electronic format or publish it in the standard
paper format. The payoff matrix, in thousands of dollars of profit, for the two publishers
is shown below.
Lex E.
Kahn
Expand
Hold
Thea Sorus
Paper
0, 3
3, 0
Electronic
2, 1
1, 2
Does this game have any dominant strategies?
Yes
No No
Are there any dominated strategies?
Yes
No No
Are there any pure strategy Nash equilibria? (Hint: Find Lex's and Thea's best response
plays.)
Yes
No No
Let p be the probability that Lex expands and q be the probability that Thea goes
electronic. Find the values for p and q in Lex's and Thea's mixed strategies.
P= =1/2
Q= =3/4
Are the mixed strategies a Nash equilibrium?
Yes No Yes
How do you
know?
Each mixed strategy has been constructed as a best
response to the opponent's play.
Phil A. Mignon and Sal Monella are restaurateurs in Philadelphia. On the occasion of the
2000 Republican National Convention both are contemplating mounting special promotions.
Sal
Monella
No Promo
Promotion
Phil A.
Mignon
No Promo
3, 1
0, 0
Promotion
0, 0
1, 4
Find the pure strategy Nash equilibria of the game. {Promo, Promo} and {No Pro, No Pro}
Find the mixed strategies for Phil and Sal.
Phil A. Mignon probability of Promo
1/5
Sal Monella probability of Promo 3/4