Instructions

Upload this homework into the homework vaults in the IS no later than on 26/4 at 23.59. The
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effort and thorough thinking (whether your answers make sense, whether you have supported all your
claims by careful argumentation, whether your answers are informed by data). Try to formulate ideas
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Homework 5 (your name and surname will be added to the name of the document automatically). Put
your name and surname on the top of your homework.

Task 1 (8 points, maximum 1000 words)

Read the paper by Normann (2011) (see the study materials). Answer the following questions:

1.      What is the aim of the paper?

2.      What is the problem with the OSS (1990) model? How do they reply to the critique?

3.      Explain carefully the difference between foreclosure in narrow and broad sense.

4.      How many and what treatments are used in the experiment? Suppose that the narrow definition
of foreclosure is valid. What results would you expect in these treatments?

5.      Why does the author have different number of sessions with random matching and fixed
matching?

6.      Interpret the results in the table 4. Does it fit to a broadly or narrowly defined
foreclosure?

7.      Explain what is the quantal response equilibrium (QRE)? How does it differ from Nash
equilibrium?

8.      What arguments does the author use in order to support the claim that the notion of QRE may
explain experimental results?