Question from Past Microeconomics Qualifying ExamEdit
Fall 2004 - Section II, Question one, George Mason University
Consider the following payoff matrix:
- Find the two pure strategy Nash equilibria
- Find the mixed strategy Nash equilibrium.
- The two Pure Strategy Nash Equilibria in this game are (Peace, War) and (War, Peace). Given the other players decision no player would want to play differently in these situation.
- The Mixed Strategy Nash Equilibrium can be calculated as follows:
6σ + 1 (1 - σ) = 15σ
5σ + 1 = 15σ
σ = 0.1
6φ + 1 (φ - 1) = 15φ
φ = 0.1
MSNE = (0.1, 0.1)