Now let's modify the timing structure of the game. Suppose that Coke's entry decision is made...

   

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Now let's modify the timing structure of the game. Suppose that Coke's entry decision is made at the same time that Pepsi decides between tough and accommodate. Then if Coke chooses to enter, it has a further decision between tough and accommodate. Suppose that the payoffs at every terminal node that follow enter are exactly as before. If Coke stays out, then the payoffs are (0, -1) if Pepsi plays T and (0, 0) if Pepsi plays A. (a) Write down the extensive form of the modified game. How many sub- games are there in this game? (b) Solve the game by backward induction. Be sure to show the key steps. (c) Suppose the payoffs when Coke stays out are (0, 1) and (0, 0) instead when, respectively, Pepsi plays T and A. Solve this game by backward induction. Coke 0 Pepsi 0,5 Coke A T A -2.-1 -3,1 0.-3 1,2 Now let's modify the timing structure of the game. Suppose that Coke's entry decision is made at the same time that Pepsi decides between tough and accommodate. Then if Coke chooses to enter, it has a further decision between tough and accommodate. Suppose that the payoffs at every terminal node that follow enter are exactly as before. If Coke stays out, then the payoffs are (0, -1) if Pepsi plays T and (0, 0) if Pepsi plays A. (a) Write down the extensive form of the modified game. How many sub- games are there in this game? (b) Solve the game by backward induction. Be sure to show the key steps. (c) Suppose the payoffs when Coke stays out are (0, 1) and (0, 0) instead when, respectively, Pepsi plays T and A. Solve this game by backward induction. Coke 0 Pepsi 0,5 Coke A T A -2.-1 -3,1 0.-3 1,2

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The question provided involves an exercise on game theory particularly on the analysis of an extensiveform game with modifications to the timing structure of players decisions Lets address each part o... View the full answer