How would you play the World’s Simplest Poker Game?

Thanks to Jeff Ely and David McAdams – I’m still thinking about this one. Anyone have a good strategy?

Problem: Find the (unique) symmetic equilibrium of “The World’s Simplest Poker Game”, played as follows:
**0** two players
**1** each player pays ante of $100
**2** each player receives ONE card, which we can think of as independent random numbers on [0,1]
**3** each player SIMULTANEOUSLY decides whether to “raise” $100 or “stay”
**4A** if one player raises and the other stays, the raiser wins the pot, for net gain +$100
**4B** if both raise, the players show their cards and whoever has the highest card wins for net gain +$200
**4C** if both stay, the players show their cards and whoever has the highest card wins for net gain +$100
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: