(a) Write down all strategies of the players. Transform the game into a normal-form. Find all pure strategy Nash equilibria. (b) Find all weak-perfect Bayesian Nash equilibria in pure strategies. Do not forget the systems of beliefs. Argue well if there is none.

(a) Write down all strategies of the players. Transform the game into a normal-form. Find all pure strategy Nash equilibria. (b) Find all weak-perfect Bayesian Nash equilibria in pure strategies. Do not forget the systems of beliefs. Argue well if there is none.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.1P

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Question

Consider a market entry game with
imperfect information as depicted in the following picture.
2. Market entry
P,
A,
A,
A,
1-p
B,
B,
B,
В.
B,
B,
B,
\B,
7
7 7
5 5
4
4
4
3
13
3
10
16
(a) Write down all strategies of the players. Transform the
game into a normal-form. Find all pure strategy Nash
equilibria.
(b) Find all weak-perfect Bayesian Nash equilibria in pure
strategies. Do not forget the systems of beliefs. Argue
well if there is none.

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