(a) (10 points) Is there a Perfect Bayesian Equilibrium in which the firm advertises both good and bad products? Find it or show that there is no such equilibrium.

(b) (15 points) Find all the separating Perfect Bayesian Equilibria.

(c) (5 points) Note that

- if 2 observed the quality of the product, she would buy good products and not buy bad ones

- if it was impossible to advertise, she would never buy.

Discuss the role of advertising and its social value based on your findings above.

(d) (20 points) Suppose the game is as above but 2 does not see whether 1 advertised. Solve the game using the appropriate solution concept.

QUEDIIUN Z Consider the following game in extensive form between a Firm (Player 1) and a Consumer (Player 2). The Firm's product can be Good or Bad. -2. 0 Ann (a) (10 points) Is there a Perfect Bayesian Equilibrium in which the rm advertises both good and bad products? Find it or show that there is no such equilibrium. (b) (15 points) Find all the separating Perfect Bayesian Equilibria. (c) (5 points) Note that - if 2 observed the quality of the product, she would buy good products and not buy bad ones - if it was impossible to advertise, she would never buy. Discuss the role of advertising and its social value based on your findings above. (d) (20 points) Suppose the game is as above but 2 does not see whether 1 advertised. Solve the game using the appropriate solution concept