2. In a multi-period chain store game with 20 markets, the payoffs of all players are...

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2. In a multi-period chain store game with 20 markets, the payoffs of all players are just like described in class with a = 2 and b= 1. All entrants originally believe that the chain store is crazy with probability 0.1 (and the chain store knows it). a) How many entrants will stay out in PBE? b) What the chain store expected payoff in the whole game? c) What would the chain store do if entrant 15 (counted from the end, like in class) entered? What would the updated beliefs of entrant 14 be? d) What would it do if entrant 2 entered? What would the updated beliefs of entrant 1 be? 2. In a multi-period chain store game with 20 markets, the payoffs of all players are just like described in class with a = 2 and b= 1. All entrants originally believe that the chain store is crazy with probability 0.1 (and the chain store knows it). a) How many entrants will stay out in PBE? b) What the chain store expected payoff in the whole game? c) What would the chain store do if entrant 15 (counted from the end, like in class) entered? What would the updated beliefs of entrant 14 be? d) What would it do if entrant 2 entered? What would the updated beliefs of entrant 1 be?

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