4. Finding Nash equilibria in sequential gamesHubert and Larry are trying to decide what movie to see together. There are two theaters in town, each playing one movie. Hubert would prefer to seeone movie (call it movie H) and Larry would prefer to see the other movie (movie L), but both would prefer to see one of the movies together ratherthan their preferred movies separately. As they are discussing where to meet, Larry's cell phone loses power, cutting the conversation short. Bothmovies start in 10 minutes; therefore, each person must decide which movie to see without being able to communicate with the other. The followingpayoff matrix represents the game they are playing.HubertMovie HMovie LHubertLarryMovie H45, 300,0Suppose Larry is near home and quickly starts charging his phone. At home, however, he gets terrible phone service but a strong wireless signal.Therefore, instead of calling Hubert, he uses a smartphone app to observe Hubert's location using GPS. Because Larry can see whether Hubert headsin the direction of movie H or movie L, he can base his decision on Hubert's decision. Hubert's phone alerts him that Larry is tracking him.Movie HMovie LHubert still has the same strategies available, but Larry now has four possible strategies. The following table represents the sequential version of thisgame in normal form. The table shows each strategy as the letter for the movie Larry chooses, followed by a vertical bar, followed by the letter for thecorresponding movie Hubert chose.Movie L0,030, 45Strategy 1LIH; LILLarryStrategy 2H|H; H|LStrategy 3H|H; LILStrategy 4LIH; HILIf Larry decides to choose movie L conditional on Hubert's choosing movie H and L conditional on Hubert's choosing movie L (that is, he chooses toalways go to movie L), he is playingComplete the previous table by choosing the correct payoffs according to each of the strategies that Larry chooses and the actions Hubert chooses.Hubert's payoff is given first, as in the preceding payoff matrix.Which of the following represent a Nash equilibrium in this sequential version of the game? Check all that apply.Hubert goes to movie H and Larry plays strategy 2Hubert goes to movie L and Larry plays strategy 1Hubert goes to movie H and Larry plays strategy 1Hubert goes to movie L and Larry plays strategy 3Hubert goes to movie H and Larry plays strategy 3

There are two players : Hubert & Larry Strategy Set of Hubert = Strategy Set of Larry = { Movie…

Hubert and Larry are trying to decide what movie to see together. There are two theaters in town, each playing one movie. Hubert would prefer to see one movie (call it movie H) and Larry would prefer to see the other movie (movie L), but both would prefer to see one of the movies together rather than their preferred movies separately. As they are discussing where to meet, Larry's cell phone loses power, cutting the conversation short. Both movies start in 10 minutes; therefore, each person must decide which movie to see without being able to communicate with the other. The following payoff matrix represents the game they are playing. Larry Movie H Movie L

Hubert and Larry are trying to decide what movie to see together. There are two theaters in town, each playing one movie. Hubert would prefer to see one movie (call it movie H) and Larry would prefer to see the other movie (movie L), but both would prefer to see one of the movies together rather than their preferred movies separately. As they are discussing where to meet, Larry's cell phone loses power, cutting the conversation short. Both movies start in 10 minutes; therefore, each person must decide which movie to see without being able to communicate with the other. The following payoff matrix represents the game they are playing. Larry Movie H Movie L

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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