3. Player 1 and Player 2 are going to play the following stage game twice: Top Bottom Left 4,3 0,0 Player 2 Middle 0,0 2,1 Right 1,4 0,0 Player 1 There is no discounting in this problem and so a player's payoff in this repeated game is the sum of her payoffs in the two plays of the stage game. (a) Find the Nash equilibria of the stage game. Is (Top, Left) a Nash of the stage game? (b) Find a subgame perfect Nash equilibrium of the repeated game where the first time they play the stage game Player 1 chooses Top and Player 2 chooses Left.

ENGR.ECONOMIC ANALYSIS
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Author:NEWNAN
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Chapter1: Making Economics Decisions
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3. Player 1 and Player 2 are going to play the following stage game twice:
Player 1
Top
Bottom
Left
4,3
0,0
Player 2
Middle
0,0
2,1
Right
1,4
0,0
There is no discounting in this problem and so a player's payoff in this repeated game is the sum
of her payoffs in the two plays of the stage game.
(a) Find the Nash equilibria of the stage game. Is (Top, Left) a Nash of the stage game?
(b) Find a subgame perfect Nash equilibrium of the repeated game where the first time they play
the stage game Player 1 chooses Top and Player 2 chooses Left.
Transcribed Image Text:3. Player 1 and Player 2 are going to play the following stage game twice: Player 1 Top Bottom Left 4,3 0,0 Player 2 Middle 0,0 2,1 Right 1,4 0,0 There is no discounting in this problem and so a player's payoff in this repeated game is the sum of her payoffs in the two plays of the stage game. (a) Find the Nash equilibria of the stage game. Is (Top, Left) a Nash of the stage game? (b) Find a subgame perfect Nash equilibrium of the repeated game where the first time they play the stage game Player 1 chooses Top and Player 2 chooses Left.
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