Use the following setting for questions 7-8. Players A and B play a dynamic version of matching pennies described below. The game follows in 3 stages. First, player A chooses the order of play, i.e. who makes the first move: player A or player B. This decision is public. Then this chosen (first) player chooses between heads and tails. Then the second (other) player observes that choice and also chooses whether to play heads or tails. For example, player A could choose that player A (themselves) makes the first move; then player A chooses tails; then player B observes it and also chooses tails. Since both of them choose to play tails, their payoffs are 1 and -1 as follows from the payoff matrix below. Player B

Use the following setting for questions 7-8. Players A and B play a dynamic version of matching pennies described below. The game follows in 3 stages. First, player A chooses the order of play, i.e. who makes the first move: player A or player B. This decision is public. Then this chosen (first) player chooses between heads and tails. Then the second (other) player observes that choice and also chooses whether to play heads or tails. For example, player A could choose that player A (themselves) makes the first move; then player A chooses tails; then player B observes it and also chooses tails. Since both of them choose to play tails, their payoffs are 1 and -1 as follows from the payoff matrix below. Player B

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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