Part II: Suppose only player 1 observes nature's move (and it is common knowledge). (d) Represent the game in extensive form. (e) Represent the game in Bayesian normal form. (f) Find the unique BNE. 2. In this question, your goal will be to understand whether learning in games is always valuable for players. Consider the following incomplete-information game. First, nature chooses between one of the following two A and B tables, each with probability 0.5: A L R B L R U 0,0 6,-3 U-20,-20-7,-16 D -3,6 5,5 D -16,-7 -5,-5 Then, players 1 and 2 simultaneously choose U or D and L or R, respectively, and obtain payoffs according to the table chosen by nature. Parts I-III present variations of this game under different assumptions about what players know about nature's move. Part I: Suppose no player observes nature's move (and it is common knowledge). (a) Represent the game in extensive form. (b) Represent the game in Bayesian normal form. (c) Find the unique BNE.
Part II: Suppose only player 1 observes nature's move (and it is common knowledge). (d) Represent the game in extensive form. (e) Represent the game in Bayesian normal form. (f) Find the unique BNE. 2. In this question, your goal will be to understand whether learning in games is always valuable for players. Consider the following incomplete-information game. First, nature chooses between one of the following two A and B tables, each with probability 0.5: A L R B L R U 0,0 6,-3 U-20,-20-7,-16 D -3,6 5,5 D -16,-7 -5,-5 Then, players 1 and 2 simultaneously choose U or D and L or R, respectively, and obtain payoffs according to the table chosen by nature. Parts I-III present variations of this game under different assumptions about what players know about nature's move. Part I: Suppose no player observes nature's move (and it is common knowledge). (a) Represent the game in extensive form. (b) Represent the game in Bayesian normal form. (c) Find the unique BNE.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Part II: Suppose only player 1 observes nature's move (and it is common knowledge).
(d) Represent the game in extensive form.
(e) Represent the game in Bayesian normal form.
(f) Find the unique BNE.
Transcribed Image Text:2. In this question, your goal will be to understand whether learning in games is always valuable for players. Consider the
following incomplete-information game. First, nature chooses between one of the following two A and B tables, each with
probability 0.5:
A L
R
B
L
R
U 0,0 6,-3
U-20,-20-7,-16
D -3,6 5,5
D -16,-7 -5,-5
Then, players 1 and 2 simultaneously choose U or D and L or R, respectively, and obtain payoffs according to the table chosen
by nature. Parts I-III present variations of this game under different assumptions about what players know about nature's
move.
Part I: Suppose no player observes nature's move (and it is common knowledge).
(a) Represent the game in extensive form.
(b) Represent the game in Bayesian normal form.
(c) Find the unique BNE.
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