The situation is the case of 'Partially Aligned Interests: Financial Adviser and Investor' in Chapter 9. You will complete a similar analysis for the case where the adviser's report has to be the coarser choice between B or "not B." In this case, the game is represented as the following tree: Nature ● B (1/3) M (1/3) G (1/3) Bad Adviser ● Not Bad Adviser • Not Bad Adviser ● Not Bad You You You Invest Not Invest Not i Invest I Not Not Invest "Not 2,-52 0,0 2-L, -52 0,0 2.2, -1.2 0,0 13, 42 0, 0 where L is the cost of lost reputation from exaggeration. The babbling Nash Equilibrium of this game is

The situation is the case of 'Partially Aligned Interests: Financial Adviser and Investor' in Chapter 9. You will complete a similar analysis for the case where the adviser's report has to be the coarser choice between B or "not B." In this case, the game is represented as the following tree: Nature ● B (1/3) M (1/3) G (1/3) Bad Adviser ● Not Bad Adviser • Not Bad Adviser ● Not Bad You You You Invest Not Invest Not i Invest I Not Not Invest "Not 2,-52 0,0 2-L, -52 0,0 2.2, -1.2 0,0 13, 42 0, 0 where L is the cost of lost reputation from exaggeration. The babbling Nash Equilibrium of this game is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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