**Game Tree Analysis**In this game represented in extensive form (game tree), follow the answers below based on the diagram above:### Diagram ExplanationThe game tree shows two players making sequential decisions. - **Player 1** starts at the top node and can choose between actions **E** or **X**.- If Player 1 chooses **E**, then **Player 2** gets to select between options **a**, **b**, and **c**.- If Player 1 chooses **X**, the result is directly **(2, 2)**.From **Player 2's** decisions:- If **a** is chosen, Player 1 selects between **L** and **R**, leading to the outcomes **(3,1)** and **(0,0)**, respectively.- If **b** is chosen, Player 1 also chooses between **L** and **R**, both leading to **(0,0)**.- If **c** is chosen, the outcome is directly **(2,2)** and there is no further action for Player 1.### Questions and Answersi. **Information Sets** - Player 1 has **2** information sets. - Player 2 has **1** information set. - (Recall: An information set can contain one or more decision nodes.)ii. **Subgames** - There are **0** proper subgames in this game. - (Recall: A proper subgame is a subgame other than the whole game itself.)iii. **Player 2's Knowledge** - When choosing between **a**, **b**, and **c**, Player 2 knows whether Player 1 chose **E** or **X**.iv. **Player 1's Knowledge** - When choosing between **L** and **R**, Player 1 knows Player 2's choice between **a**, **b**, and **c**.

The above provided game has two players - Player 1 & 2 Player 1 strategy set : {E ,X , L ,R }…

Answer the following considering the game represented in extensive form (game tree) above: i. Player 1 has 2 information set(s) and Player 2 has 1 information set(s). (Recall: An information set can contain one or more decision nodes.) ii. There is (are) ♦ proper subgame(s) in this game (Recall: A proper subgame is a subgame other than the whole game itself.)

Answer the following considering the game represented in extensive form (game tree) above: i. Player 1 has 2 information set(s) and Player 2 has 1 information set(s). (Recall: An information set can contain one or more decision nodes.) ii. There is (are) ♦ proper subgame(s) in this game (Recall: A proper subgame is a subgame other than the whole game itself.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Topic is information economics
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