Question # 4 Static Game for Chapter Exercise 11.4 Blue Dragon Barnacle Bottom Old Toby Southern Star Barnacle Bottom (150, 150) (200, 250) (250, 350) Red Pony Old Toby (250, 125) (175, 200) (270, 245) Southern Star (350, 250) (150, 275) (200, 300) Payoffs: (Red Pony, Blue Dragon) Suppose that the static game depicted in Figure El1.4 is modeled as a sequential-move game with Red Pony moving first. a. Illustrate the extensive form of this game. b. Identify all the subgames. C. What is the Nash equilibrium for each proper subgame? d. Use backward induction to find the subgame perfect equilibrium.

Question # 4 Static Game for Chapter Exercise 11.4 Blue Dragon Barnacle Bottom Old Toby Southern Star Barnacle Bottom (150, 150) (200, 250) (250, 350) Red Pony Old Toby (250, 125) (175, 200) (270, 245) Southern Star (350, 250) (150, 275) (200, 300) Payoffs: (Red Pony, Blue Dragon) Suppose that the static game depicted in Figure El1.4 is modeled as a sequential-move game with Red Pony moving first. a. Illustrate the extensive form of this game. b. Identify all the subgames. C. What is the Nash equilibrium for each proper subgame? d. Use backward induction to find the subgame perfect equilibrium.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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a) How many players does this game have? What are the strategies of each player? (b) What are the Nash equilibria of this game? (c) What are the Pareto Efficient outcomes?
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