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d. Solve the game by the Rollback method. Identify the dominant strategies and circle the Nash Equilibrium for each subgame and write it above its starting node. How has the penalty changed the firm's behavior?

d. Solve the game by the Rollback method. Identify the dominant strategies and circle the Nash Equilibrium for each subgame and write it above its starting node. How has the penalty changed the firm's behavior?

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter8: Game Theory
Section: Chapter Questions
Problem 8.6P
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Nash Equilibrium (NE) A: Period 1 B: A A: 4 A: 2 B: 1 B: 2 Period 2 Nash Equilibrium (NE) Nash Equilibrium (NE) A: A: B: B: A: 6 A: 4 A: 7 A: 5 A: 4 A: 2 A:5 A: 3 B: 6 B: 7 B: 4 B: 5 B: 7 B: 8 B:5 B: 6 d. Solve the game by the Rollback method. Identify the dominant strategies and circle the Nash Equilibrium for each subgame and write it above its starting node. е. How has the penalty changed the firm's behavior?
Transcribed Image Text:Nash Equilibrium (NE) A: Period 1 B: A A: 4 A: 2 B: 1 B: 2 Period 2 Nash Equilibrium (NE) Nash Equilibrium (NE) A: A: B: B: A: 6 A: 4 A: 7 A: 5 A: 4 A: 2 A:5 A: 3 B: 6 B: 7 B: 4 B: 5 B: 7 B: 8 B:5 B: 6 d. Solve the game by the Rollback method. Identify the dominant strategies and circle the Nash Equilibrium for each subgame and write it above its starting node. е. How has the penalty changed the firm's behavior?
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