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
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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.
Transcribed Image Text: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.
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