Two investors have each deposited 5 (all amounts are in $10,000s) with a bank. The bank has invested these deposits in a long-term project. If both investors make withdrawals at date 1 then each receives 3 and the game ends. If only one investor makes a withdrawal at date 1 then that investor receives 5, the other receives 1, and the game ends. Finally, if neither investor makes a withdrawal at date 1 then the project matures and the investors make withdrawal decisions at date 2. If both investors make withdrawals at date 2 then each receives 7 and the game ends. If only one investor makes a withdrawal at date 2 then that investor receives 9, the other receives 5, and the game ends. Finally, if neither investor makes a withdrawal at date 2 then the bank returns 7 to each investor and the game ends. Show the bi-matrix for dates 1 and 2.
Two investors have each deposited 5 (all amounts are in $10,000s) with a bank. The bank has invested these deposits in a long-term project. If both investors make withdrawals at date 1 then each receives 3 and the game ends. If only one investor makes a withdrawal at date 1 then that investor receives 5, the other receives 1, and the game ends. Finally, if neither investor makes a withdrawal at date 1 then the project matures and the investors make withdrawal decisions at date 2. If both investors make withdrawals at date 2 then each receives 7 and the game ends. If only one investor makes a withdrawal at date 2 then that investor receives 9, the other receives 5, and the game ends. Finally, if neither investor makes a withdrawal at date 2 then the bank returns 7 to each investor and the game ends. Show the bi-matrix for dates 1 and 2.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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