The second image contains the game information. The grenade game is a member of the following class of simplegames of complete and perfect information:1. Player 1 chooses an action a₁ from the feasible set A₁.2. Player 2 observes a₁ and then chooses an action a2 from thefeasible set A₂.3. Payoffs are u₁(a₁, a2) and u₂(a1, a2). 2.21. Give the extensive-form and normal-form representationsof the grenade game described in Section 2.1. What are the pure-strategy Nash equilibria? What is the backwards-induction out-come? What is the subgame-perfect Nash equilibrium?

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Answered: 2.21. Give the extensive-form and…

Principles of Microeconomics

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ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

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2.21. Give the extensive-form and normal-form representations of the grenade game described in Section 2.1. What are the pure- strategy Nash equilibria? What is the backwards-induction out- come? What is the subgame-perfect Nash equilibrium?