Consider the following game tree. The players are P1 and P2. The strategies availableto P1 are L, M, R. The strategies available to P2 are A and B.P1LRMP2(1,10)AВAB(0,0)(2,1)(0,0)(2,1) (a) Compute the Nash equilibrium in pure strategies.(b) Compute the Subgame Perfect Nash equilibrium(c) Compute the perfect Perfect Bayesian equilibrium in pure strategies.

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(a) Compute the Nash equilibrium in pure strategies.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter13: Between Competition And Monopoly

Section: Chapter Questions

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Question

Consider the following game tree. The players are P1 and P2. The strategies available
to P1 are L, M, R. The strategies available to P2 are A and B.
P1
L
R
M
P2
(1,10)
A
В
A
B
(0,0)
(2,1)
(0,0)
(2,1)

(a) Compute the Nash equilibrium in pure strategies.
(b) Compute the Subgame Perfect Nash equilibrium
(c) Compute the perfect Perfect Bayesian equilibrium in pure strategies.

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