Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:2.
Consider the two-player strategic form game represented in the following payoff table:
t
1 m
b
7,2
1,2
3,7
2
M
2,4
3,4
1,6
R
1,3
7,1
4,2
Player 1 chooses between rows, S₁ = {t, m, b), and receives the first listed payoff in
each cell. Player 2 chooses between columns, S₂ = {L, M, R), and receives the
second listed payoff in each cell.
a. Does either player have a strictly dominant strategy? Explain.
b. Explaining your steps carefully, identify the set of rationalizable strategies in
this game.
c. Making sure to explain your solution method, solve for all pure strategy Nash
equilibria in this game.
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