Solve for the Stackelberg subgame-perfect Nash equilibrium for the fol- lowing game tree (see next page). What is the joint-profit maximizing outcome? Why is that not the outcome of this game? LeaderFollowerProfitsSets OutputSets Output48(64.9, 64.8)18064Firm 2(54.0, 72.0)96(32.4, 64.8)48(72.0, 54.0)24064Firm 1Firm 2(57.6, 57.6)96(28.8, 43.2)48(64.8, 32.4)36064Firm 2(43.2, 28.8)96(0, 0)

In-Game theory a subgame perfect equilibrium refers to the learning of a Nash equilibrium used in…

Leader Follower Profits Sets Output Sets Output (, T2) 48 (64.9, 64.8) 180 64 Firm 2 (54.0, 72.0) 96 (32.4, 64.8) 48 (72.0, 54.0) 240 64 Firm 1 Firm 2 (57.6, 57.6) 96 (28.8, 43.2) 48 (64.8, 32.4) 360 64 Firm 2 (43.2, 28.8) 96 (0, 0)

Leader Follower Profits Sets Output Sets Output (, T2) 48 (64.9, 64.8) 180 64 Firm 2 (54.0, 72.0) 96 (32.4, 64.8) 48 (72.0, 54.0) 240 64 Firm 1 Firm 2 (57.6, 57.6) 96 (28.8, 43.2) 48 (64.8, 32.4) 360 64 Firm 2 (43.2, 28.8) 96 (0, 0)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Solve for the Stackelberg subgame-perfect Nash equilibrium for the fol- lowing game tree (see next page). What is the joint-profit maximizing outcome? Why is that not the outcome of this game?

Leader
Follower
Profits
Sets Output
Sets Output
48
(64.9, 64.8)
180
64
Firm 2
(54.0, 72.0)
96
(32.4, 64.8)
48
(72.0, 54.0)
240
64
Firm 1
Firm 2
(57.6, 57.6)
96
(28.8, 43.2)
48
(64.8, 32.4)
360
64
Firm 2
(43.2, 28.8)
96
(0, 0)

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