True, False, Why Questions a through e

(a) Consider a group of people looking to improve a private road. The private road leads from a main road to each person's private residence. Assume that the decision to improve the road is based upon majority vote and costs are allocated by serial cost sharing. An agent will always vote against a road which goes past her own home. [10 marks]

(b) Ann has a house she is looking to sell, and Bob is considering buying it. All agents value a house which is not leaky more than a house which is leaky. Bob does not know if the house is leaky. Trade between Ann and Bob is more likely if Ann knows if the house is leaky. [10 marks]

(c) The strategies played in a SGPNE must be extensive form rationalizable. [10 marks]

(d) Say that Ann and Bob are playing a Nash equilibrium of a normal form game. There cannot be an alternative outcome of the normal form game which makes both Ann and Bob strictly better off. [10 marks]

(e) Because an infinite horizon alternating offers bargaining game has no end, it is not possible to use backwards induction to solve it. For this reason, infinite horizon alternating offers bargaining games often don't have SGPNE. [10 marks]

Give explanation