Player A decides how many cookies to bake and Player B decides how to divide the...
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Player A decides how many cookies to bake and Player B decides how to divide the cookies between them. There are two sizes of trays that Player A can use. The large tray fits 20 cookies while the small tray fits 10 cookies. Player B can either choose to divide the cookies that Player A bakes equally or can choose a split which leaves Player A with 10% of the cookies and Player B with 90% of the cookies. (a) (7 marks) Suppose the two players move simultaneously. Write this game in normal form. You can assume that each player's payoff is equal to the number of cookies consumed by that player. Find the pure strategy NE of this game. (b) (7 marks) Suppose Player A moves first. Write this game in extensive form. Find the SPNE for this game. In particular, state the players' SPNE strategies, the SPNE paths, and the SPNE payoffs. (c) (8 marks) Is this a game with a first-mover or second-mover advantage? (d) (3 marks) Give a brief intuitive explanation for your answer in part (c). Player A decides how many cookies to bake and Player B decides how to divide the cookies between them. There are two sizes of trays that Player A can use. The large tray fits 20 cookies while the small tray fits 10 cookies. Player B can either choose to divide the cookies that Player A bakes equally or can choose a split which leaves Player A with 10% of the cookies and Player B with 90% of the cookies. (a) (7 marks) Suppose the two players move simultaneously. Write this game in normal form. You can assume that each player's payoff is equal to the number of cookies consumed by that player. Find the pure strategy NE of this game. (b) (7 marks) Suppose Player A moves first. Write this game in extensive form. Find the SPNE for this game. In particular, state the players' SPNE strategies, the SPNE paths, and the SPNE payoffs. (c) (8 marks) Is this a game with a first-mover or second-mover advantage? (d) (3 marks) Give a brief intuitive explanation for your answer in part (c).
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