(a) Model this situation as a game in extensive form and find its Nash equilibria. (b) Find the subgame perfect Nash equilibria. (c) Consider variants of this game. Are there any preferences for the two players among the three policies for which the outcome in a subgame perfect equilibrium of the game in which player 1 moves first differs from the outcome in a subgame perfect equilibrium of the game in which player 2 moves first?

Microeconomic Theory
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Chapter7: Uncertainty
Section: Chapter Questions
Problem 7.3P
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help me wiith abc please. please be detailed please. thank you

Two people select a policy that affects them both by alternatively vetoing
policies until only one remains. First person 1 vetoes a policy. If more than
1 policy remains, person 2 then vetoes a policy. If more than one policy still
remains, person 1 then vetoes another policy. The process continues until a
single policy remains unvetoed.
Suppose there are three possible policies: X, Y, and Z. Person 1 prefers X to
Y to Z, and person 2 prefers Z to Y to X.
(a) Model this situation as a game in extensive form and find its Nash
equilibria.
(b) Find the subgame perfect Nash equilibria.
(c) Consider variants of this game. Are there any preferences for the two
players among the three policies for which the outcome in a subgame
perfect equilibrium of the game in which player 1 moves first differs from
the outcome in a subgame perfect equilibrium of the game in which player
2 moves first?
Transcribed Image Text:Two people select a policy that affects them both by alternatively vetoing policies until only one remains. First person 1 vetoes a policy. If more than 1 policy remains, person 2 then vetoes a policy. If more than one policy still remains, person 1 then vetoes another policy. The process continues until a single policy remains unvetoed. Suppose there are three possible policies: X, Y, and Z. Person 1 prefers X to Y to Z, and person 2 prefers Z to Y to X. (a) Model this situation as a game in extensive form and find its Nash equilibria. (b) Find the subgame perfect Nash equilibria. (c) Consider variants of this game. Are there any preferences for the two players among the three policies for which the outcome in a subgame perfect equilibrium of the game in which player 1 moves first differs from the outcome in a subgame perfect equilibrium of the game in which player 2 moves first?
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