QUESTION 13 Consider the following extensive form of the game. There are two players. If Player 2 tries to rob Player 1, and Player 1 pays $100, the game is over. If Player 1 refuses to pay $100, then Player 2 has two choices: (1) one is to hurt Player 1, and (2) the other is to walk away. Explain the equilibrium in this game. Player 1 (Victim) Don't Pay $100 (-$100,+$100) Hurt Player 2 (Robber) Don't ($5,000, $1,000) (0,0)

QUESTION 13 Consider the following extensive form of the game. There are two players. If Player 2 tries to rob Player 1, and Player 1 pays $100, the game is over. If Player 1 refuses to pay $100, then Player 2 has two choices: (1) one is to hurt Player 1, and (2) the other is to walk away. Explain the equilibrium in this game. Player 1 (Victim) Don't Pay $100 (-$100,+$100) Hurt Player 2 (Robber) Don't ($5,000, $1,000) (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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