Not use ai please Question 3: Bayesian Nash equilibriumConsider the two games/payoff matrices in Figures 1 and 2 ("Game A" and "Game B", respec-tively). The overall extensive-form game G, which is characterized by incomplete information, isdefined as follows.⚫ Nature first draws either Game A or Game B, with Pr[Game A] = 1. Player 1 observesNature's choice perfectly, while Player 2 does not observe it. Thereafter, the two playerssimultaneously choose their actions a₁ € (Up, Down) and a₂ € (Left, Right), respectively.Finally, the players receive their payoffs, which are given by the payoffs in Game A or B,depending on Nature's choice.(a) Draw a game tree that shows the extensive form of the incomplete-information game Gdescribed above.(b) Solve for the Bayesian Nash equilibria of the game G.2Player 2LeftRightUp1,14,0Player 1Down0,43,3Figure 1: Game A (see Question 3)Player 2LeftRightUp0,00,1Player 1Down1,03,3Figure 2: Game B (see Question 3)

Part (b) Find the Bayesian Nash Equilibrium1. Player 1's Strategies Since Player 1 knows what game…

Answered: Question 3: Bayesian Nash equilibrium…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.7P

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Consider the following two-player game.First, player 1 selects a number x≥0. Player 2 observes x. Then, simultaneously andindependently, player 1 selects a number y1 and player 2 selects a number y2, at which pointthe game ends.Player 1’s payoff is: u1(x; y1) = −3y21 + 6y1y2 −13x2 + 8xPlayer 2’s payoff is: u2(y2) = 6y1y2 −6y22 + 12xy2Draw the game tree of this game and identify its Subgame Perfect Nash Equilibrium.
help please. please be detailed please. i think we also need to draw some diagrams
i. ii. QUESTION ONE A. A Nash equilibrium is a strategy profile such that every player's strategy is the best response to all the other players. It requires that each player makes a best response and that expectations regarding the play of other players are correct. Below is the table showing strategies and payoff for Player 1 and Player 2. PLAYER 1 R1 R2 R3 R4 C1 0,7 5,2 7,0 6,6 C2 2,5 3,3 2,5 2,2 PLAYER 2 C3 7,0 5,2 0,7 4,4 CA 6,6 2,2 4,4 10,4 REQUIRED; Transform the normal form game above into an imperfect extensive game form Find the Nash equilibrium for the game above using iterative deletion of strictly dominated strategies. Find the Nash equilibrium using brute force or cell by cell inspection.
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Suppose players A and B play a discrete ultimatum game where A proposes to split a $5 surplus and B responds by either accepting the offer or rejecting it. The offer can only be made in $1 increments. If the offer is accepted, the players' payoffs resemble the terms of the offer while if the offer is rejected, both players get zero. Also assume that players always use the strategy that all strictly positive offers are accepted, but an offer of $0 is rejected. A. What is the solution to the game in terms of player strategies and payoffs? Explain or demonstrate your answer. B. Suppose the ultimatum game is played twice if player B rejects A's initial offer. If so, then B is allowed to make a counter offer to split the $5, and if A rejects, both players get zero dollars at the end of the second round. What is the solution to this bargaining game in terms of player strategies and payoffs? Explain/demonstrate your answer. C. Suppose the ultimatum game is played twice as in (B) but now there…
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