Consider the game depicted below. Player 1 decides between A and B in stage 1 of the game, and between G and H in stage 3 (if it is reached). Player 2 decides between C and D if Player 1 chose A, or between E and F if Player 1 chose B, in stage 2 of the game. 1 A B 2 с D (3,3) (0,5) G H (4,5) (5,-1) (a) List all the possible pure strategies for each player in this game and illustrate the payoffs from each pair of strategies in a matrix. [Note: each player's strategy should prescribe an action for each of his/her information node (set), regardless of whether that node will be reached in the outcome.] (b) Identify the Nash Equilibria strategies and payoffs. (c) Which of the Nash Equilibria is/ are also subgame perfect equilibrium / equilibria? Explain. E (-1,0) 2 F

Consider the game depicted below. Player 1 decides between A and B in stage 1 of the game, and between G and H in stage 3 (if it is reached). Player 2 decides between C and D if Player 1 chose A, or between E and F if Player 1 chose B, in stage 2 of the game. 1 A B 2 с D (3,3) (0,5) G H (4,5) (5,-1) (a) List all the possible pure strategies for each player in this game and illustrate the payoffs from each pair of strategies in a matrix. [Note: each player's strategy should prescribe an action for each of his/her information node (set), regardless of whether that node will be reached in the outcome.] (b) Identify the Nash Equilibria strategies and payoffs. (c) Which of the Nash Equilibria is/ are also subgame perfect equilibrium / equilibria? Explain. E (-1,0) 2 F

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

A10.

Consider the game depicted below. Player 1 decides between A and B in stage 1 of the game, and between G and
H in stage 3 (if it is reached). Player 2 decides between C and D if Player 1 chose A, or between E and F if Player 1
chose B, in stage 2 of the game.
1
A
B
2
с
D
(3,3)
(0,5)
G
H
(4,5)
(5,-1)
(a) List all the possible pure strategies for each player in this game and illustrate the payoffs from each pair of
strategies in a matrix. [Note: each player's strategy should prescribe an action for each of his/her information node
(set), regardless of whether that node will be reached in the outcome.]
(b) Identify the Nash Equilibria strategies and payoffs.
(c) Which of the Nash Equilibria is / are also subgame perfect equilibrium / equilibria? Explain.
E
(-1,0)
2
F

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