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Which one is false for the following three player game? Choice A for Player 3        L    R T       3, 5, 3 2, 2, 3 M 1, 4, 2 4, 0, 0 B 2, 4, 1 1, 0, 8 Choice B for Player 3        L    R T       2, 3, 5 4, 2, 6 M 1, 4, 3 1, 2, 1 B 2, 1, 1 3, 2, 6   A

Economics Aug 22, 2020

Which one is false for the following three player game?

Choice A for Player 3

       L    R
T       3, 5, 3 2, 2, 3
M 1, 4, 2 4, 0, 0
B 2, 4, 1 1, 0, 8


Choice B for Player 3

       L    R
T       2, 3, 5 4, 2, 6
M 1, 4, 3 1, 2, 1
B 2, 1, 1 3, 2, 6
  A.

Player 3 does not have a  weakly dominated strategy

  B.

There is more than one outcome that survives the iterative elimination of strongly dominated strategies

  C.

(T,L,B) is the only outcome that survives the iterated elimination of strongly dominated strategies

  D.

Player 1 has a weakly dominated strategy

Expert Solution

A
L   R
T 2, 3, 5 4, 2, 6
M 1, 4, 3 1, 2, 1
B   2, 1, 1    3, 2, 6
B
L   R
T 3, 5, 3 2, 2, 3
M   1, 4, 2   4, 0, 0
B   2, 4, 1   1, 0, 8

For player 1 strategy T always dominates strategy B in both cases i.e. whether player 3 chooses A or B

Hence the reduced form of game will look like below

A B
L   R
T 2, 3, 5   4, 2, 6
M   1, 4, 3   1, 2, 1

B
L   R
T 3, 5, 3 2, 2, 3
M   1, 4, 2   4, 0, 0

for player 2 strategy L always dominates strategy R in both cases i.e. whether player 3 chooses A or B
Hence the reduced form of game will look like below

A
L     
T   2, 3, 5     
M   1, 4, 3     

B
L  
T 3, 5, 3
M   1, 4, 2     

As more than one outcome survives

therfore now player 3 will always chooses A because the payoff from A is always higher than B

therefore Nash equilibrium is (T,L,A)

Hence option C is the answer

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