4) Consider the following signaling game:NatureТуре А (10%)Туре В (90%)Player 1-BPlayer 1-AOutInOutInPlayer 2) B1-B(Player 20,00,0LeftLeftRight\Right5,510,-105,510,20Let's see if it has a pooling equilibrium. Follow the following steps:a. Specify strategies of a possible pooling equilibriumb. Calculate player 2's beliefs for the belief probability B using Bayes' rule (I dowant you to calculate it, even though we know what it would be)c. Check whether either player wants to deviate. Is there a pooling equilibrium?

Answered: Image /qna-images/answer/6b0ef11d-60e4-4317-b016-7b6cb813d682.jpg

Answered: Nature Туре А (10%) Туре В (90%) Player…

Nature Туре А (10%) Туре В (90%) Player 1-B Player 1-A Out In Out In Player 2\ B 1-B (Player 2 0,0 0,0 Left Left Right \Right 5,5 10,-10 5,5 10,20

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

4) Consider the following signaling game:
Nature
Туре А (10%)
Туре В (90%)
Player 1-B
Player 1-A
Out
In
Out
In
Player 2) B
1-B
(Player 2
0,0
0,0
Left
Left
Right
\Right
5,5
10,-10
5,5
10,20
Let's see if it has a pooling equilibrium. Follow the following steps:
a. Specify strategies of a possible pooling equilibrium
b. Calculate player 2's beliefs for the belief probability B using Bayes' rule (I do
want you to calculate it, even though we know what it would be)
c. Check whether either player wants to deviate. Is there a pooling equilibrium?

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