Question

Consider the following guessing game and rules: • You and your opponent simultaneously submit guesses that must be whole numbers between 11 and 20 (inclusive). • You earn a base prize equal to the number you declare. (So if you say 12, you earn 12 dollars.) • You earn a bonus of 20 dollars if your guess is exactly one less than your opponent’s guess.

(a) Does a player in this game have any dominant or dominated strategies?

(b) What are the Nash Equilibria of this game? Justify why these are equilibria

Answer 1