This question is about game theory in economics. please show all your workings and answers 2.Write down the extensive form of the game below. For P1, strategies you see beloware not the names of the strategies. Rather, it is the combination of strategies for P1acting at different nodes.P3: XP2AA 0, 0, 0, 0, 0, 0P1 AB 0, 0, 00, 0, 0BABB 0, 0, 00, 0, 0 P10, 0, 00, 0, 0AAABBABBP3: YP2с1, 1, 11, 1, 12, 2, 22, 2, 2S1, 1, 11, 1, 1 P12, 2, 22, 2, 2AAABBABBP3: ZP2сS3, 3,3 4,4,45, 5, 55, 5, 53, 3, 34, 4, 45, 5, 55, 5, 5

Given, Three Players : Player 1, Player 2 and Player 3 Player 1 has four strategies : AA, AB, BA,…

Answered: Write down the extensive form of the…

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter13: Between Competition And Monopoly

Section: Chapter Questions

Problem 10DQ

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This question is about game theory in economics. please show all your workings and answers

2.
Write down the extensive form of the game below. For P1, strategies you see below
are not the names of the strategies. Rather, it is the combination of strategies for P1
acting at different nodes.
P3: X
P2
AA 0, 0, 0, 0, 0, 0
P1 AB 0, 0, 0
0, 0, 0
BA
BB 0, 0, 0
0, 0, 0 P1
0, 0, 0
0, 0, 0
AA
AB
BA
BB
P3: Y
P2
с
1, 1, 1
1, 1, 1
2, 2, 2
2, 2, 2
S
1, 1, 1
1, 1, 1 P1
2, 2, 2
2, 2, 2
AA
AB
BA
BB
P3: Z
P2
с
S
3, 3,3 4,4,4
5, 5, 55, 5, 5
3, 3, 34, 4, 4
5, 5, 55, 5, 5

Definition Definition Economic decision-making framework that analyzes how different players optimize their outcomes with given pay-offs corresponding to their available strategies. The assumptions of game theory are: The number of players or competitors are finite/limited; All participants are rational The rules of the game are known to every player; and Each participant has a finite set of actions. A common way in which game theory is presented as an ( m x n ) matrix in which m represents the strategies of row player and n represents the strategies of column player. There are several limitations of game theory: Many businesses have a large number of competitors, and selecting an optimal strategy in these circumstances is difficult; Real-life business operating environments are full of uncertainty and difficult to model as a game theory; and The assumption of rationality and utility maximization isn't always an accurate portrayal of human nature.

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