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)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.11P

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