In order to find the subgame perfect Nash equilibrium of the whole game first focus on the subgame that starts with investor 1's second decision node: Not Withdraw 2 Withdraw Not Withdraw 15 20 10 15 10 20 Which is a pure strategy Nash equilibrium of this subgame? a) (Withdraw, Withdraw) b) (Withdraw, Not) c) (Not, Withdraw) d) (Not, Not) Not 15 15
In order to find the subgame perfect Nash equilibrium of the whole game first focus on the subgame that starts with investor 1's second decision node: Not Withdraw 2 Withdraw Not Withdraw 15 20 10 15 10 20 Which is a pure strategy Nash equilibrium of this subgame? a) (Withdraw, Withdraw) b) (Withdraw, Not) c) (Not, Withdraw) d) (Not, Not) Not 15 15
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter16: Information, Risk, And Insurance
Section: Chapter Questions
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![In order to find the subgame perfect Nash equilibrium of the whole game first focus on the subgame that starts
with investor 1's second decision node:
1
Not
Withdraw
2
Withdraw
Not Withdraw,
15
20
10
15
10
20
Which is a pure strategy Nash equilibrium of this subgame?
a) (Withdraw, Withdraw)
b) (Withdraw, Not)
c) (Not, Withdraw)
Od) (Not, Not)
Not
15
15](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8fe3f235-bb32-49eb-97a5-b78d29c7ef32%2Fdd9b34cc-ba35-45a0-b48b-5f31fb56abea%2Fozf6l3b_processed.png&w=3840&q=75)
Transcribed Image Text:In order to find the subgame perfect Nash equilibrium of the whole game first focus on the subgame that starts
with investor 1's second decision node:
1
Not
Withdraw
2
Withdraw
Not Withdraw,
15
20
10
15
10
20
Which is a pure strategy Nash equilibrium of this subgame?
a) (Withdraw, Withdraw)
b) (Withdraw, Not)
c) (Not, Withdraw)
Od) (Not, Not)
Not
15
15
![4.
●
There are 2 investors. Each has deposited $10 in the same bank.
The bank invested both deposits in a single long-term project.
If the bank wants to end the project before its completion, a total of $12 can be recovered (out of the $20
invested).
If the bank waits until the project is completed, it will receive a total of $30.
Investors can withdraw money from their bank accounts at only 2 periods: before the project is completed
and after.
The extensive from representation of the game between both investors is depicted below:
Withdraw
Not
2
Not Withdraw
Not
10
2
1
2
10
Withdraw
Withdraw
15
Withdraw
6
6
2
Not Withdraw
20
10
Not
Not
15](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8fe3f235-bb32-49eb-97a5-b78d29c7ef32%2Fdd9b34cc-ba35-45a0-b48b-5f31fb56abea%2F7ort7xe_processed.png&w=3840&q=75)
Transcribed Image Text:4.
●
There are 2 investors. Each has deposited $10 in the same bank.
The bank invested both deposits in a single long-term project.
If the bank wants to end the project before its completion, a total of $12 can be recovered (out of the $20
invested).
If the bank waits until the project is completed, it will receive a total of $30.
Investors can withdraw money from their bank accounts at only 2 periods: before the project is completed
and after.
The extensive from representation of the game between both investors is depicted below:
Withdraw
Not
2
Not Withdraw
Not
10
2
1
2
10
Withdraw
Withdraw
15
Withdraw
6
6
2
Not Withdraw
20
10
Not
Not
15
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