Two players are involved in a game. In the game each player begins with $10. Eachplayer must simultaneously make a choice of how much of the $10 to allocate betweentwo accounts: a 'private' account, and a 'public' account. Money allocated to the privateaccount by a player is kept by that player. Money allocated to the public account ismultiplied by 1.5, and then distributed back equally to each of the two players. Eachplayer has two possible choices: (i) Allocate $0 to the public account; (ii) Allocate $10 tothe public account. A player's payoff from each outcome is equal to the sum of theirprivate account money and one-half of the total public account money. For example, ifboth players allocated $10 to the public account, they each have a payoff equal to $0 +(1/2) ($20) (1.5) = $15.00.Draw a game table to represent this game.Do players have a strict dominant strategy in this game?What is the Nash equilibrium of the game?Does the Nash equilibrium outcome maximise the total payoff to players?How can you explain this result?Now suppose that the game is played sequentially. One player chooses which amount toallocate to the public account; after which the other player, having observed the choicemade by the first player, makes their own choice of how much to allocate to the publicaccount.Draw the game tree for the sequential game.What is the rollback equilibrium of the sequential game?

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by a player is kept by that player. Money allocated to the public account d by 1.5, and then distributed back equally to each of the two players. E as two possible choices: (i) Allocate $0 to the public account; (ii) Allocate c account. A player's payoff from each outcome is equal to the sum of th ccount money and one-half of the total public account money. For exam vers allocated $10 to the public account, they each have a payoff equal to 0)(1.5) = $15.00. Draw a game table to represent this game. Do players have a strict dominant strategy in this game? What is the Nash equilibrium of the game? Does the Nash equilibrium outcome maximise the total payoff to play you explain this result? pose that the game is played sequentially. One player chooses which am to the public account; after which the other player, having observed the the first player, makes their own choice of how much to allocate to the p Draw the game tree for the sequential game. What is the rollback equilibrium of the sequential game?

by a player is kept by that player. Money allocated to the public account d by 1.5, and then distributed back equally to each of the two players. E as two possible choices: (i) Allocate $0 to the public account; (ii) Allocate c account. A player's payoff from each outcome is equal to the sum of th ccount money and one-half of the total public account money. For exam vers allocated $10 to the public account, they each have a payoff equal to 0)(1.5) = $15.00. Draw a game table to represent this game. Do players have a strict dominant strategy in this game? What is the Nash equilibrium of the game? Does the Nash equilibrium outcome maximise the total payoff to play you explain this result? pose that the game is played sequentially. One player chooses which am to the public account; after which the other player, having observed the the first player, makes their own choice of how much to allocate to the p Draw the game tree for the sequential game. What is the rollback equilibrium of the sequential game?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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