Consider the following game. Firm 1 can implement one of two actions, A or B. Firm action chosen by Firm 1 and then decides whether to fight it or not. F2 (-2, 1) Fight A Don't fight -(3, 2) Firm 1 (-2, 3) B Don't fight -(4,2) (a) Consider the following strategy profile: Firm 1 chooses A; Firm 2 chooses don't fight if B. • this strategy profile is [Select] strategy profile: Firm 1 chooses A; Firm 2 chooses don't (b) Consider the following don't fight if B. • this strategy profile is [Select] (c) Consider the following strategy profile: Firm 1 chooses B; Firm 2 chooses fight • this strategy profile is [Select] F2 Fight

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
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Chapter8: Game Theory
Section: Chapter Questions
Problem 8.6P
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Question 3
Consider the following game. Firm 1 can implement one of two actions, A or B. Firm 2 observes the
action chosen by Firm 1 and then decides whether to fight it or not.
F2
(-2, 1)
Fight
A
Don't fight
Firm 1
(-2, 3)
Fight
B
Don't fight
-(4,2)
(a) Consider the following strategy profile: Firm 1 chooses A; Firm 2 chooses don't fight if A, and
fight if B.
• this strategy profile is
[Select]
strategy profile: Firm 1 chooses A; Firm 2 chooses don't fight if A, and
(b) Consider the following
don't fight if B.
• this strategy profile is [Select]
(c) Consider the following strategy profile: Firm 1 chooses B; Firm 2 chooses fight if A and fight if B.
• this strategy profile is [Select]
F2
-(3, 2)
Transcribed Image Text:Question 3 Consider the following game. Firm 1 can implement one of two actions, A or B. Firm 2 observes the action chosen by Firm 1 and then decides whether to fight it or not. F2 (-2, 1) Fight A Don't fight Firm 1 (-2, 3) Fight B Don't fight -(4,2) (a) Consider the following strategy profile: Firm 1 chooses A; Firm 2 chooses don't fight if A, and fight if B. • this strategy profile is [Select] strategy profile: Firm 1 chooses A; Firm 2 chooses don't fight if A, and (b) Consider the following don't fight if B. • this strategy profile is [Select] (c) Consider the following strategy profile: Firm 1 chooses B; Firm 2 chooses fight if A and fight if B. • this strategy profile is [Select] F2 -(3, 2)
is ✓ [Select]
in
not a Nash equilibrium
a Nash equilibrium, but not a subgame perfect Nash equilibrium
A,
a subgame perfect Nash equilibrium
none of the above
Transcribed Image Text:is ✓ [Select] in not a Nash equilibrium a Nash equilibrium, but not a subgame perfect Nash equilibrium A, a subgame perfect Nash equilibrium none of the above
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