Eco 550 Assignment 3

Topics: Nash equilibrium, Game theory, Marginal cost Pages: 3 (513 words) Published: June 5, 2011
Kia Cole

Eco 550

Assignment 3

May 22, 2011

1. Some games of strategy are cooperative. One example is deciding which side of the road to drive on. It doesn’t matter which side it is as long as everyone chooses the same side. Otherwise, everyone may get hurt. Driver 2 Left Right Driver 1 Left 0, 0 -1000 -1000

Right -1000, -1000 0, 0

a. Does either player have a dominant strategy? Explain.

In my view there is no dominant strategy for either driver 1 or 2. There is no pure strategy instead there seems to be a mixed strategy for both drivers. If driver 1 chooses to go left, and if driver 2 also chooses left less chance for a collision, and the same is true with both drivers going to the right. On other hand if the drivers choose opposite directions this can result in an accident.

Driver 1 can go either left or right and driver 2 can go left or right as well which means neither of the drivers has no dominant strategy.

b. Is there Nash equilibrium in this game? Explain

There are two Nash Equilibrium which are (Left, Left) and (Right, Right). If driver 1 is going left then driver 2 can choose left and less chances for an accident so to speak. The reverse is true that if driver 1 goes right driver 2 should also choose right.

c. Why this game is called a cooperative game?

In this situation a driver could get hurt if either driver 1or driver 2 other chooses opposite sides both drivers should choose a direction that is the same either left or right. If one driver chooses left then other may to choose left as well and if one driver chooses goes right then other driver may also choose right as well.

It can be looked at as a cooperative game because neither of the drivers would be hurt and both would...
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