Question: 3. (20 points) Consider the following game: there are two players 1 and 2. The strategy set for player 1 is X = [0,1]. The

 3. (20 points) Consider the following game: there are two players

3. (20 points) Consider the following game: there are two players 1 and 2. The strategy set for player 1 is X = [0,1]. The strategy set for player 2 is Y = [l], 1]. A generic strategy for player 1 is denoted by :r. E [l], 1], and likewise a gonorio strategy for player 2 2 will be denoted by y E [0, 1]. You can think of the two players choosing numbers 1' and y in [0,1]. The payo' function for player 1 is, n.(r,y}=3:ry2r2y+2, VIE [0,1], VyE [0,1]. Likewise, the payoff function for player 2 is, nape, y} = 4:ry + 21' + 3;, V1.- 6 [0,1], Vy E [0, 1]. Note that the two payo' functions are not symmetric. Compute a {pure strategy] Nash Equilibrium in this game. (Hint: Compute the host response correspondences, and try to nd if there are points of intersection of the two host responses

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!