3 Game Theory (10 points) (A) Saudi-Arabia and Iran both have to decide simultaneously how much oil to produce: less than the 3 Game Theory (10 points) (A) Saudi-Arabia and Iran both have to decide simultaneously how much oil to produce: less than their quota, equal to their quota, or more. The payoff matrix is the following (Saudi-Arabia is on the left, Iran on top / right): Iran. Less Quota More to 4/1 213 217 Quota 3/0 111 112 | More 0/4 1/10 31-2: Saudi (1) Which strategy is dominated? (1) () Find the Nash Equilibrium in pure strategies for the game above. (2) (ii) For the same game, if Saudi Arabia could credibly commit to a strategy that Iran can observe, which one would it pick?? (3)

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