Exercise 4.11 Find the subgame-perfect equilibria of the game shown in Figure 4.25, assuming the following about the players' preferences. Both Amy and Bill are selfish and greedy, are interested in their own net gain, Amy values the object at $5 and Bill at $4. $2 Amy $3 Bill $2 $3 $2 $3 Amy Amy Amy Pass $4 Pass $4 Pass $6 Pass $6 Bill Amy Bill Amy Amy Amy Bill Amy wins wins wins wins wins wins wins wins pays pays pays pays pays pays pays $2 pays $4 $3 $4 $3 $6 $3 $6 Figure 4.25: The game of Exercise 4.11
Exercise 4.11 Find the subgame-perfect equilibria of the game shown in Figure 4.25, assuming the following about the players' preferences. Both Amy and Bill are selfish and greedy, are interested in their own net gain, Amy values the object at $5 and Bill at $4. $2 Amy $3 Bill $2 $3 $2 $3 Amy Amy Amy Pass $4 Pass $4 Pass $6 Pass $6 Bill Amy Bill Amy Amy Amy Bill Amy wins wins wins wins wins wins wins wins pays pays pays pays pays pays pays $2 pays $4 $3 $4 $3 $6 $3 $6 Figure 4.25: The game of Exercise 4.11
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Exercise 4.11 Find the subgame-perfect equilibria of the game shown in Figure 4.25,
assuming the following about the players' preferences. Both Amy and Bill are selfish
and greedy, are interested in their own net gain, Amy values the object at $5 and Bill at
$4.
$2
Amy
$3
Bill
$2
$3
$2
$3
Amy
Amy
Amy
Pass
$4 Pass
$4 Pass
$6 Pass
$6
Bill
Amy Bill
Amy Amy
Amy Bill
Amy
wins
wins wins
wins wins
wins wins
wins
pays
pays pays
pays pays
pays pays
$2
pays
$4
$3
$4
$3
$6
$3
$6
Figure 4.25: The game of Exercise 4.11
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