1. Consider a two player, simultaneous move game. The strategies available to each player and payoffs are shown in the following matrix form: T Player 1 M B Player 2 L R 6,4 5,2 8,5 4,4 9,3 5,9 7,5 4,4 5,2 Game 5 a) Find and write down the Nash equilibria in pure strategies, if any exist. b) Say that instead of being a simultaneous move game this game had been sequential. First player 1 will choose a strategy and then player 2 will observe the choice made by player 1 and choose a strategy. The full structure of the game, including all payoffs, is common knowledge to both players. Sketch a game tree to represent the extensive form of this game. Find and write down the subgame perfect Nash equilibria.

1. Consider a two player, simultaneous move game. The strategies available to each player and payoffs are shown in the following matrix form: T Player 1 M B Player 2 L R 6,4 5,2 8,5 4,4 9,3 5,9 7,5 4,4 5,2 Game 5 a) Find and write down the Nash equilibria in pure strategies, if any exist. b) Say that instead of being a simultaneous move game this game had been sequential. First player 1 will choose a strategy and then player 2 will observe the choice made by player 1 and choose a strategy. The full structure of the game, including all payoffs, is common knowledge to both players. Sketch a game tree to represent the extensive form of this game. Find and write down the subgame perfect Nash equilibria.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.6P

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