Answer all questions, show all working.Consider the following game in strategic or normal form. A2B2C2A11,01,2-2,1B16,20,32,3C12,2-2,12,3 Use the iterative elimination of strictly dominated strategies to reduce the game as much as possible.What is the set of rationalizable strategies for each player?What is/are Nash equilibrium(s) in this game?Explain the differences between cooperative and non- cooperative games. What are the fundamental hypotheses about the behavior of the persons in Game theory?

Explanation:[a],[b] & [c] I started by analyzing the game from a strategic standpoint and looked…

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Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 3MC

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Answer all questions, show all working.

Consider the following game in strategic or normal form.

	A2	B2	C2
A1	1,0	1,2	-2,1
B1	6,2	0,3	2,3
C1	2,2	-2,1	2,3

Use the iterative elimination of strictly dominated strategies to reduce the game as much as possible.
What is the set of rationalizable strategies for each player?
What is/are Nash equilibrium(s) in this game?
Explain the differences between cooperative and non- cooperative games. What are the fundamental hypotheses about the behavior of the persons in Game theory?

Definition Definition Economic decision-making framework that analyzes how different players optimize their outcomes with given pay-offs corresponding to their available strategies. The assumptions of game theory are: The number of players or competitors are finite/limited; All participants are rational The rules of the game are known to every player; and Each participant has a finite set of actions. A common way in which game theory is presented as an ( m x n ) matrix in which m represents the strategies of row player and n represents the strategies of column player. There are several limitations of game theory: Many businesses have a large number of competitors, and selecting an optimal strategy in these circumstances is difficult; Real-life business operating environments are full of uncertainty and difficult to model as a game theory; and The assumption of rationality and utility maximization isn't always an accurate portrayal of human nature.

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