Consider the following extensive-form game with two players, 1and 2. a). Find the pure-strategy Nash equilibria of
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Question:
Consider the following extensive-form game with two players, 1and 2.
a). Find the pure-strategy Nash equilibria of the game. [8Marks]
b). Find the pure-strategy subgame-perfect equilibria of thegame. [6 Marks]
c). Derive the mixed strategy Nash equilibrium of the subgame.If players play this mixed Nash equilibrium in the subgame, would 1player In or Out at the initial mode? [6 Marks]
[Hint: Write down the normal-form of the subgame and derive themixed Nash equilibrium of the subgame. Next, compare the payoff ofplayer 1 from the mixed strategy equilibrium with 1's payoff fromplaying Out.]
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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