Question: Consider an extensive form game in which there are two players, Kodak and P olaroid. In this extensive form game, the initial node is associated
Consider an extensive form game in which there are two players, Kodak and
P olaroid. In this extensive form game, the initial node is associated with
Kodak, and at this node Kodak has two available actions, Out and In When
Kodak chooses Out, then the game ends with the payoff allocation uK uP
When Kodak chooses In then Kodak and P olaroid come to compete
in the instant photography market, where each of them can choose either F ight
or Accomodate without knowing the others action. Moroever, after they choose
their actions, the game ends. The payoff allocations are specified according to
their choice of actions in the market competition as follows:
i if both choose F ight, then the payoff allocation is uK uP
ii if P olaroid chooses F ight and Kodak chooses Accomodate, then the
payoff allocation is uK uP ;
iii if Kodak chooses F ight and P olaroid chooses Accomodate, then the
payoff allocation is uK uP ;
iv if both choose Accomodate, then the payoff allocation is uK uP
where and
Given this extensive form game, answer the following questions:
Describe the game tree of this game.
Describe the game matrix of this game.
Compute what pure strategy Nash equilibria are in this game.
Compute what subgame perfect equilibria in this game.
Is there a pure strategy Nash equilibrium which is based on an incredible
commitment of Kodak? If yes, specify which of pure strategies is incredible? If
no explain why there is no incredible pure strategy for Kodak.
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