School of Architecture and Planning

Game Theory problems

Here are some notes on the game theory problems....

[warning: discussions about solutions are below- try to test yourself first!]

Question 3: This is much longer than a "good" exam question because filling out the pay-off matrix is so complicated.
If they each charge the same amount, they get half of the tourists (so, 3000) and half of the locals (so, 2000). So they will each sell 5,000 beers and hence receive payoffs of (10k, 10K), (20K, 20K), (25K, 25K) along the diagonal.
If one changes more than the other, the "cheaper" guy gets all of the locals (so, 4000) and the "expensive" pub gets half of the tourists (so, 3000). Thus when PJ changes $2 and Billy charges $4, PJ gets $2*4000 + $2*3000 = 14K and Billy gets $4*3000 = 12K.... etc....
FYI, depending on when you downloaded that practice sheet, there may be a typo. Payoffs when they are charging $4 and $5 (or $5 and $4) should be 15K for the one charging $4 and 28K for the one charging $5 (one of the cells incorrectly has a "14" in place of a "15" in an old version, the correct version is now on Stellar).

Question 4: Let's double-check (hare, hare) as a Nash equilibrium. If Player A is going to play "hare", Player B is happy that he played hare (alternatively, he'd get 0). If player B is going to play "hare", Player A is happy that he played hare (alternatively, he'd get 0). Yes, it is a Nash equilibrium. Corrected version is on Stellar.

Judy Geyer

Announced on 07 November 2017  7:10  p.m. by Judy A Geyer

Monday practice session 7-8:30pm, 9-354

Hello Class,

The TAs' review session will be Monday the 6th from 7-8:30pm in room 9-354.

Many thanks to Hongmou, Shekhar, and David for hosting a review session!

Judy Geyer

Announced on 03 November 2017  3:07  p.m. by Judy A Geyer

Practice midterm #2 posted

Hello Class,

Practice midterm #2 is posted. Solutions are also posted in a separate document. The actual exam may be longer by about half-a-problem, in terms of overall effort/time. Please note that the practice exam does not cover all possible topics: everything we've done since the last midterm is fair game. In addition to the practice exam, I suggest reviewing all homework problems, too.

The "Exams" tab on Stellar also has a document with extra game theory problems. Solutions are on the last page of that document, so don't scroll down too quickly.

Tuesday's lecture will be a review. I will have office hours next Tuesday until 3pm.

We are working on a room reservation for a Monday night review session to go over the practice exam, hosted by the TAs.

Thanks,
Judy Geyer

Announced on 02 November 2017  10:14  p.m. by Judy A Geyer

Readings for Thursday are posted

Hello Class,

Readings for Thursday are posted:

NYTimes piece by Richard Thaler
Early conference talk by Daniel Kahneman and Amos Tversky
TED talk by Barry Schwartz on the paradox of choice

Enjoy!
JG

Announced on 31 October 2017  10:08  a.m. by Judy A Geyer

Readings for Tuesday, Asymmetric Information

Hello Class,

Tuesday will be "Class 15: Asymmetric Information".

The main reading for Tuesday is not a chapter in KW.
Instead, please read Chapter 17 of Pindyck & Rubinfeld's Microeconomics textbook (on Stellar).

Additionally, there is a link on Stellar to an old NYTimes op-ed about micro-lending, and a podcast about the high cost of textbooks.

I'll send an email when I've finalized the readings for next Thursday.

Thanks,
JG

Announced on 27 October 2017  1:17  p.m. by Judy A Geyer