6. 9.●There are two players.●The payoffs to player 2 depend on whether 2 is a friendly player (with probability p) or a foe (with probability 1 - p).●Player 2 knows if he/she is a friend or a foe, but player 1 doesn't know.See the following payoff matrices for details.FriendLeftRightLeft3,10,0Right2,11,0with probability pFoeRightLeft0,1Right1,1probabili1Left3,02,0 with probability 1-pWhen p = 1/4, which is a pure strategy Bayesian equilibrium:(1's strategy; 2's type - 2's strategy)(Right; Friend - Right, Foe - Right);(Left; Friend - Left, Foe - Left);(Left; Friend - Left, Foe - Right);O (Right; Friend - Left, Foe - Right);

The theory that explains the way choices are made when there are more than one choices is called…

with probability 1-p When p = 1/4, which is a pure strategy Bayesian equilibrium: (1's strategy; 2's type - 2's strategy) (Right; Friend - Right, Foe - Right); (Left; Friend - Left, Foe - Left); (Left; Friend - Left, Foe - Right); O (Right; Friend - Left, Foe - Right);

with probability 1-p When p = 1/4, which is a pure strategy Bayesian equilibrium: (1's strategy; 2's type - 2's strategy) (Right; Friend - Right, Foe - Right); (Left; Friend - Left, Foe - Left); (Left; Friend - Left, Foe - Right); O (Right; Friend - Left, Foe - Right);

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter18: Auctions

Section: Chapter Questions

Problem 4MC

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The mixed stratergy nash equalibrium consists of : the probability of firm A selecting October is 0.692 and probability of firm A selecting December is 0.309. The probability of firm B selecting October is 0.5 and probability of firm selecting December is 0.5. In the equilibrium you calculated above, what is the probability that both consoles are released in October? In December? What are the expected payoffs of firm A and of firm B in equilibrium?
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