(a) Write down all strategies of the players. Transform the game into a normal-form. Find all pure strategy Nash equilibria. (b) Find all weak-perfect Bayesian Nash equilibria in pure strategies. Do not forget the systems of beliefs. Argue well if there is none.

(a) Write down all strategies of the players. Transform the game into a normal-form. Find all pure strategy Nash equilibria. (b) Find all weak-perfect Bayesian Nash equilibria in pure strategies. Do not forget the systems of beliefs. Argue well if there is none.

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

Consider a market entry game with
imperfect information as depicted in the following picture.
2. Market entry
P,
A,
A,
A,
1-p
B,
B,
B,
В.
B,
B,
B,
\B,
7
7 7
5 5
4
4
4
3
13
3
10
16
(a) Write down all strategies of the players. Transform the
game into a normal-form. Find all pure strategy Nash
equilibria.
(b) Find all weak-perfect Bayesian Nash equilibria in pure
strategies. Do not forget the systems of beliefs. Argue
well if there is none.

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