Consider the following game. Firm 1 can implement one of two actions, Aor B. Firm 2 observes the action chosen by Firm 1 and then decideswhether to fight it or not.(-10, 20)F2FightADon't fight-(30, 10)Firm 1(-10, 0)FightBDon't fight-(20, 15)(a) Consider the following strategy profile: Firm 1 chooses A; Firm 2chooses fight if A, and fight if B.• this strategy profile is [Select](b) Consider the following strategy profile: Firm 1 chooses B; Firm 2chooses fight if A, and don't fight if B.• this strategy profile is [Select]O(c) Consider the following strategy profile: Firm 1 chooses B; Firm 2chooses don't fight if A and don't fight if B.• this strategy profile is [Select]00F2() Consider the following game. Firm 1 can implement one of two actions, Aor B. Firm 2 observes the action chosen by Firm 1 and then decideswhether to fight it or not.F2(-10, 20)FightADon't fight-(30, 10)Firm 1(-10, 0)FightBDon't fight-(20, 15)(a) Consider the following strategy profile: Firm 1 chooses A; Firm 2chooses fight if A, and fight if B.• this strategy profile is [Select]Firm 2(b) Consider the followingchooses fight if A, and dornot a Nash equilibrium. this strategy profile isa Nash equilibrium, butnot a subgame perfectNash equilibrium(c) Consider the followingchooses don't fight if A anFirm 2a subgame perfect Nashequilibrium• this strategy profile isnone of the above00F2✓ [Select]

We have given a sequential move game where player 1 moves first and then player 2 moves.

Answered: Consider the following game. Firm 1 can…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Transcribed Image Text:Consider the following game. Firm 1 can implement one of two actions, A or B. Firm 2 observes the action chosen by Firm 1 and then decides whether to fight it or not. (-10, 20) F2 Fight A Don't fight -(30, 10) Firm 1 (-10, 0) Fight B Don't fight -(20, 15) (a) Consider the following strategy profile: Firm 1 chooses A; Firm 2 chooses fight if A, and fight if B. • this strategy profile is [Select] (b) Consider the following strategy profile: Firm 1 chooses B; Firm 2 chooses fight if A, and don't fight if B. • this strategy profile is [Select] O (c) Consider the following strategy profile: Firm 1 chooses B; Firm 2 chooses don't fight if A and don't fight if B. • this strategy profile is [Select] 00 F2 ()

Transcribed Image Text:Consider the following game. Firm 1 can implement one of two actions, A or B. Firm 2 observes the action chosen by Firm 1 and then decides whether to fight it or not. F2 (-10, 20) Fight A Don't fight -(30, 10) Firm 1 (-10, 0) Fight B Don't fight -(20, 15) (a) Consider the following strategy profile: Firm 1 chooses A; Firm 2 chooses fight if A, and fight if B. • this strategy profile is [Select] Firm 2 (b) Consider the following chooses fight if A, and dor not a Nash equilibrium . this strategy profile is a Nash equilibrium, but not a subgame perfect Nash equilibrium (c) Consider the following chooses don't fight if A an Firm 2 a subgame perfect Nash equilibrium • this strategy profile is none of the above 00 F2 ✓ [Select]

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