Consider the following game in the build up to an election. The incumbent right-wing politician must first decide whether to occupy a right-wing or a left-wing stance on a particular policy. After the incumbent has made this decision, the left-wing challenger must then make the same choice. If both choose the same policy stance, the incumbent will stay in office. If both choose a different policy, the challenger will win the election and take office. The value of winning the election is 10, while the loser will get a value of 0. However, if a politician chooses a policy that is different from their own view, they get a value of -5. Where would the Subgame Perfect Nash Equilibrium be in this game? (Hint: Draw the game tree, and form the payoffs based on the information about the value of winning an
Consider the following game in the build up to an election. The incumbent right-wing politician must first decide whether to occupy a right-wing or a left-wing stance on a particular policy. After the incumbent has made this decision, the left-wing challenger must then make the same choice. If both choose the same policy stance, the incumbent will stay in office. If both choose a different policy, the challenger will win the election and take office. The value of winning the election is 10, while the loser will get a value of 0. However, if a politician chooses a policy that is different from their own view, they get a value of -5. Where would the Subgame Perfect Nash Equilibrium be in this game? (Hint: Draw the game tree, and form the payoffs based on the information about the value of winning an
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter31: Public Choice And Special Interet Group Politics
Section: Chapter Questions
Problem 6QP
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