Which one of the following descriptions is correct according to this extensive form? (I think it's 3rd option but unsure) ► 0, 0- 1, 1→ 1, – 1R1, – 1►0, 0>→ - 1, 1- 1, 1P.1, – 1→ 0, 0O There are 4 players.O Player 2's strategy space is different from Player 1'sThere are 9 possible strategy profiles.When Player 2 is going to make her decision, she knows exactly what decision Player1 makes.

Answered: ► 0, 0 - 1, 1 → 1, – 1 R 1, – 1 ► 0, 0…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Which one of the following descriptions is correct according to this extensive form? (I think it's 3rd option but unsure)

► 0, 0
- 1, 1
→ 1, – 1
R
1, – 1
►
0, 0
>
→ - 1, 1
- 1, 1
P.
1, – 1
→ 0, 0
O There are 4 players.
O Player 2's strategy space is different from Player 1's
There are 9 possible strategy profiles.
When Player 2 is going to make her decision, she knows exactly what decision Player
1 makes.

Expert Solution

Step 1

Given:

An extensive form game with two players: player 1 and player 2. Each player can choose from three strategies: R, P and S. The extensive form game is used in the situations in which the second player does not know the move of the first player.

Step 2

There are a total of 9 possible strategy profiles:

(R,R), (R,P), (R,S), (P,R), (P,P), (P,S), (S,R), (S,P) and (S,S).

The strategy on the left is choosen by player 1 and the strategy on right is choosen by player 2. There are a total of 9 possible combinations of different strategies. So, there are 9 different strategy profiles.

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