Consider the following strategic interaction between two players, Player 1 (P1) and Player 2 (P2). NOTE: The first number in each payoff pair noted below is P1's payoff and the second number is P2's payoff. P1 moves first and chooses between A and B. If P1 chooses B, the game ends, the payoffs are (3, 3). If P1 chooses A, then they play the following simultaneous move game: P2 D 1,4 1, 1 P1 G 2, 1 2, 4 Answer the following questions considering the whole game (starting with P1's choice between A and B as described above). i. This game has * subgames including the whole game itself. ii. Player 1 has • information sets and Player 2 has + information sets. ii. The Nash equilibrium of the last subgame is (are) O(F, C) O(F, D) O(G, C) OG, D) iv. The subgame perfect equilibrium of the whole game is(are) D(A/G, D) D(A/F, C) (B/G, D) O(B/G, C) O(B/F, C)

Consider the following strategic interaction between two players, Player 1 (P1) and Player 2 (P2). NOTE: The first number in each payoff pair noted below is P1's payoff and the second number is P2's payoff. P1 moves first and chooses between A and B. If P1 chooses B, the game ends, the payoffs are (3, 3). If P1 chooses A, then they play the following simultaneous move game: P2 D 1,4 1, 1 P1 G 2, 1 2, 4 Answer the following questions considering the whole game (starting with P1's choice between A and B as described above). i. This game has * subgames including the whole game itself. ii. Player 1 has • information sets and Player 2 has + information sets. ii. The Nash equilibrium of the last subgame is (are) O(F, C) O(F, D) O(G, C) OG, D) iv. The subgame perfect equilibrium of the whole game is(are) D(A/G, D) D(A/F, C) (B/G, D) O(B/G, C) O(B/F, C)

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 2MC

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