Consider the following sequential game: Player 1 plays first and can choose between L and R. Player 2 plays second and can choose between U andD. If player 1 chooses L, player 2 does not get to play and both players get £1. If player 1 plays R, player 2 gets to play. • If player 2 plays U then both players get £2. If player 2 plays D then player 2 gets £3 and player 1 gets £0. What the the outcome of the subgame perfect equilibrium? a. £3-£0 b. £1-£1 Ос. This game does not have a subgame-perfect Nash-equilibrium. O d. £0-£3 e. £2-£2
Consider the following sequential game: Player 1 plays first and can choose between L and R. Player 2 plays second and can choose between U andD. If player 1 chooses L, player 2 does not get to play and both players get £1. If player 1 plays R, player 2 gets to play. • If player 2 plays U then both players get £2. If player 2 plays D then player 2 gets £3 and player 1 gets £0. What the the outcome of the subgame perfect equilibrium? a. £3-£0 b. £1-£1 Ос. This game does not have a subgame-perfect Nash-equilibrium. O d. £0-£3 e. £2-£2
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Consider the following sequential game:
Player 1 plays first and can choose between L and R.
Player 2 plays second and can choose between U and D.
• If player 1 chooses L, player 2 does not get to play and both players get £1.
If player 1 plays R, player 2 gets to play.
If player 2 plays U then both players get £2.
If player 2 plays D then player 2 gets £3 and player 1 gets £0.
What the the outcome of the subgame perfect equilibrium?
O a.
£3-£0
O b. £1-£1
O c. This game does not have a subgame-perfect Nash-equilibrium.
O d. £0-£3
O e.
£2-£2
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