Question
Asked Oct 16, 2019
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Consider the following game. There are two payers, Player 1 and Player 2. Player 1 chooses a row (10, 20, or 30), and Player 2 chooses a column (10/20/30). Payoffs are in the cells of the table, with those on the left going to Player 1 and those on the right going to player 2. 

Suppose that Player 1 chooses his strategy (10, 20 or 30), first, and subsequently, and after observing Player 1’s choice, Player 2 chooses his own strategy (of 10, 20 or 30). Which of the following statements is true regarding this modified game?


I. It is a simultaneous move game, because the timing of moves is irrelevant in classifying games.
II. It is a sequential move game, because Player 2 observes Player 1’s choice before he chooses his own strategy.
III. This modification gives Player 1 a ‘first mover advantage’.

A) I and II
B) II and III
C) I and III
D) I only
E) II only

Player 2
Player 1
10
30
10
2000/2000
1500/2300
1700/2200
1800 1800
2200/1700
1550/1750
1500 1500
30
2300/1500
1750/1550
20
20
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Player 2 Player 1 10 30 10 2000/2000 1500/2300 1700/2200 1800 1800 2200/1700 1550/1750 1500 1500 30 2300/1500 1750/1550 20 20

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Expert Answer

Step 1

The game theory is the mathematical subsidiary which helps to study the strategic information among the rational decision makers. The game theory thus, includes the two parties of decision makers who make their decision regarding the economic problems and situations.

Step 2

Since the action taking pattern between the two players shows that the decision is taken by firm 1 and the firm 2 takes the reaction after watching the action and its implication on the economy. Thus, the game is not a simultaneous game but is a sequential game. This is because, under the...

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