Question: I need this answer asap A B C D and E. QUESTION 2: A LANNISTER ALWAYS PAYS HIS DEBTS... RIGHT? (30 POINTS) When Tyrion and

I need this answer asap A B C D and E.

I need this answer asap A B C D and E. QUESTION

QUESTION 2: A LANNISTER ALWAYS PAYS HIS DEBTS... RIGHT? (30 POINTS) When Tyrion and Bronn go to the tavern together, Tyrion always forgets to bring enough money and asks Bronn for a loan of 10 Gold Dragons (a currency of Westeros) so that he can buy a round for the lowborn patrons. Tyrion promises to pay Bronn back double (20 Gold Dragons) the following day. However, when the next day comes, Tyrion can feign ignorance of the promise he made (having been very drunk) and refuse to pay Bronn back. Tyrion is willing to pay 25 Gold Dragons to buy the lowborn patrons a round. (Tyrion is a noble and would like to gain favor for his family - 25 Gold Dragons the gross valuation he puts on doing so.) Bronn is Tyrion's only friend, so if Tyrion can't secure a loan from Bronn, he will not be able to buy the round. Suppose that Bronn only cares about money, in net present value terms. (a) [12 points] In a one-time interaction, should Bronn lend the money to Tyrion? Represent their interaction formally with a game tree and describe the subgame perfect equilibrium. * Assume that neither Tyrion nor Bronn applies any discounting between today and tomorrow. Gold Dragons today are north just as much as Gold Dragons tomorron. (b) [6 points] Suppose they expect to make trips to the tavern together weekly, and the scenario described above plays out every week. Describe a strategy that Bronn could use to provide Tyrion with incentives to repay his debt (no need to check whether these incentives will actually work yet). (c) [6 points] Tyrion is an impatient sort, discounting the future at a 20% weekly rate. Will the strategy you described in (b) lead Tyrion to pay his debts? *To keep this simple, there is no need to apply discounting between the night at the bar and the repayment the next day only apply the discounting across weeks. (d) [3 points] Suppose that Tyrion and Bronn go to the bar less often than described above. Would this tend to make it easier or harder for them to engage in informal lending? Explain (e) [3 points] Suppose that Tyrion has been talking about moving to Essos and cutting all ties to his friends and family in Westeros (presumably leaving Bronn behind). Would this tend to make it easier or harder for them to engage in informal lending? Explain

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