In order to find the subgame perfect Nash equilibrium of the whole game first focus on the subgame that startswith investor 1's second decision node:1NotWithdraw2WithdrawNot Withdraw,152010151020Which is a pure strategy Nash equilibrium of this subgame?a) (Withdraw, Withdraw)b) (Withdraw, Not)c) (Not, Withdraw)Od) (Not, Not)Not1515 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 $20invested).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 completedand after.The extensive from representation of the game between both investors is depicted below:WithdrawNot2Not WithdrawNot1021210WithdrawWithdraw15Withdraw662Not Withdraw2010NotNot15

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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: 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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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