(a) Find all the Nash Equilibria, if there is any. (no explanation needed for this part (b) Does player 1 (choosing rows) have any dominant action? If yes, which action(s)? Any dominated action(s)? If yes, which ones? Answer the same questions for player 2, too. (c) If player 1 moves first (and player 2 moves next), what would be the sequentially rational equilibrium (draw the game tree and use backward induction)?
(a) Find all the Nash Equilibria, if there is any. (no explanation needed for this part (b) Does player 1 (choosing rows) have any dominant action? If yes, which action(s)? Any dominated action(s)? If yes, which ones? Answer the same questions for player 2, too. (c) If player 1 moves first (and player 2 moves next), what would be the sequentially rational equilibrium (draw the game tree and use backward induction)?
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
Chapter20: The Problem Of Adverse Selection Moral Hazard
Section: Chapter Questions
Problem 3MC
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Question
(a) Find all the Nash Equilibria, if there is any. (no explanation needed for this part
(b) Does player 1 (choosing rows) have any dominant action? If yes, which action(s)? Any dominated action(s)? If yes, which ones? Answer the same questions for player 2, too.
(c) If player 1 moves first (and player 2 moves next), what would be the sequentially rational equilibrium (draw the game tree and use backward induction)?
What if player 2 moves first (and then player 1 moves next)?
(d) Looking at your findings in (c), would player 1 want to move first or second or is she indifferent (the order doesn’t matter)?
Transcribed Image Text:Y
Z
А
4,1
0,6
1,4
В
1,1
2,3
2,2
C
2,3
1,7
3,6
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