Question: This is game theory. I need this explained detailed as possible. Problem 2: (Hawks and doves) Two firms compete for a market of value V.

This is game theory.

I need this explained detailed as possible.

This is game theory. I need this explained detailed as possible. Problem

Problem 2: (Hawks and doves) Two firms compete for a market of value V. Each one can behave aggressively (fight) or peacefully accommodate). If both accommodate, the market is split equally between them (each receives V/2). If one accommodates and the other fights, the latter takes all (V) and the former is left empty-handed (0). If both fight, each wins the market with probability 1/2. Assume each obtains V/2 (interpreted as expectation). When both choose to fight, however, the fight produces a damage of value - 2 for each firm. The value of the market can be either V = 2 or V = 6. (a) Write down the payoff matrices of the game for each of the two possible values of V. (b) Suppose both firms know V. For each value of V, find the pure-strategy Nash equilibria of the game. What kind of game is being played when V = 2? What kind of game is being played when V = 6? Problem 2: (Hawks and doves) Two firms compete for a market of value V. Each one can behave aggressively (fight) or peacefully accommodate). If both accommodate, the market is split equally between them (each receives V/2). If one accommodates and the other fights, the latter takes all (V) and the former is left empty-handed (0). If both fight, each wins the market with probability 1/2. Assume each obtains V/2 (interpreted as expectation). When both choose to fight, however, the fight produces a damage of value - 2 for each firm. The value of the market can be either V = 2 or V = 6. (a) Write down the payoff matrices of the game for each of the two possible values of V. (b) Suppose both firms know V. For each value of V, find the pure-strategy Nash equilibria of the game. What kind of game is being played when V = 2? What kind of game is being played when V = 6

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