1. Consider the following Cournot duopoly game with incomplete information. Firm 1 and Firm 2 simultaneously...
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1. Consider the following Cournot duopoly game with incomplete information. Firm 1 and Firm 2 simultaneously choose output levels y1, y2 ≥ 0. Firm 1's payoff function is given by u₁(y₁ y2)= (1 - y₁ - y2)yı whereas Firm 2's is given by u2(1.92)= (1-yi- y2)y2 + ay2. where a = 0 or a = 1. Firm 2 knows the value of a but Firm 1 does not. Firm 1 believes that a=0 with probability p and a =1 with probability (1 p), where 0 < p < 1. Find the Bayesian equilibrium of this game as a function of p. 2. Find the set of pure strategy Bayesian equilibria of the following game: Player 1 B S B 21 0.0 S 0.0 12 L-Type (g) Player 2 S 0.2 1.0 H-Type (1-q) B 20 01 1. Consider the following Cournot duopoly game with incomplete information. Firm 1 and Firm 2 simultaneously choose output levels y1, y2 ≥ 0. Firm 1's payoff function is given by u₁(y₁ y2)= (1 - y₁ - y2)yı whereas Firm 2's is given by u2(1.92)= (1-yi- y2)y2 + ay2. where a = 0 or a = 1. Firm 2 knows the value of a but Firm 1 does not. Firm 1 believes that a=0 with probability p and a =1 with probability (1 p), where 0 < p < 1. Find the Bayesian equilibrium of this game as a function of p. 2. Find the set of pure strategy Bayesian equilibria of the following game: Player 1 B S B 21 0.0 S 0.0 12 L-Type (g) Player 2 S 0.2 1.0 H-Type (1-q) B 20 01
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ANSWER 1 The Bayesian equilibrium of this game is as follows Firm 1 y1 0 y2 0 Firm 2 ... View the full answer
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