For the next elections to Governor, the opposition has decided to appear united under the same slogan, which admits the possibility of presenting up to three candidates. The opposition already has two candidates and is evaluating the possibility of including a third. For the third candidate to be included, the two already nominated must accept it. The inclusion of the third candidate increases the probability of victory for the party but reduces the probability of victory for the other two candidates. A candidate receives a utility of 1 if her party wins the election and an additional utility of 1 if she is elected. The probability of winning the match is 2/5 with two candidates and 1/2 with three. The probability of each candidate of winning within the party is 1/2 if there are two candidates and 1/3 if there are three candidates. The expected profits of the candidates are then determined by the following function: UEi = P (p) + P (c), that is, the profit of candidate i is the sum of the probability that his party wins -P (p) - plus the probability that candidate i –P (c) wins. Model the interaction between the two candidates regarding the decision to accept or reject the third candidate as a static game. Remember that the party will have three candidates only in the event that both accept the third, otherwise the party competes with two candidates. Represent the situation as a static game using the normal form.

Answer rating: 100% (QA)

If there are 2 candidates Probability of Party Winning Pp 25 Probability t... View the full answer