7 3: Alex and Aaron are political rivals, and Aaron has challenged Alex to a duel.Alex must choose whether to accept the challenge or decline, and Aaron must choosewhether to shoot Alex or miss (even if he accepts, Alex's religious convictions won'tallow him to shoot Aaron). If Alex declines, he lives but Aaron gets the satisfactionof making Alex look like a coward. If Alex accepts and Aaron misses, both men getto move on with their lives but Alex gets the benefit of defending his honor. If Alexaccepts and Aaron shoots, Alex will die but Aaron would have also killed his ownpolitical career. The payoffs are represented in the payoff matrix below:AaronShoot MissАссеpt0,02,1AlexDecline1,21,2(1) What are the pure-strategy Nash equilibria of this game?(2) Now suppose that the game is sequential. Alex first chooses whether to acceptor decline the challenge to a duel, and if Alex accepts Aaron then chooseswhether to shoot Alex or miss. In this version of the game, does one of theNash equilibria seem more rational than the other(s)? Why is that? Explainyour reasoning.

Answer 1) Aaron Â Â Shoot Miss Alex Accept (0,0) (2,1) NE Â Decline (1,2) NE (1,2) When Alex…

are political rivals, and Aaron has challenged Alex hether to accept the challenge or decline, and Aaron lex or miss (even if he accepts, Alex's religious convic Aaron). If Alex declines, he lives but Aaron gets the like a coward. If Alex accepts and Aaron misses, bo

are political rivals, and Aaron has challenged Alex hether to accept the challenge or decline, and Aaron lex or miss (even if he accepts, Alex's religious convic Aaron). If Alex declines, he lives but Aaron gets the like a coward. If Alex accepts and Aaron misses, bo

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P

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