EC 490 exam preparation
1. You'll find three extended problems. All give you a
situation, instruct you to model specific aspects of it, and then ask you to
solve for various equilibrium values of things.
2. Two problems concern zero-sum games with no NE in pure
strategies. The first problem mainly revolves around seeing how to set the game
up; once you sort that out it's simpler than the rock-paper-scissors cases from
the April problem set. The second is a standard type of problem involving 2
players with 3 strategies each. Payoffs involve uncertainty (i.e., values
between 0 and 1).
3. The third problem tests your understanding of
signaling and screening. Be sure that you fully understand the logic of the
labor market examples from the lecture, and the defender / attacker game from
later in that lecture. The question has an easier first part (4 questions) and
a more demanding second part (3 questions). Exercises 5, 6 and 7 from pp. 297
– 298 of the textbook are excellent preparation for the second part. Exercises
6 and 7 are harder than the exam problem, so if you master them your brain will
be trained up at least well enough. I've set the second part of this problem in
such a way that you don't have to do any calculations using Bayes's rule;
you'll be able to duplicate what the professional does using Bayes's rule by
trial and error with a few numbers.