242s01q2

# 242s01q2 - normal form matrix. The incumbent is deciding...

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ECONOMICS 242 QUIZ 2 SPRING 2001 PLEDGE:____________________________ NAME:______________________________ 1. In the following game, each of the three players has two strategies. Player A can move North (N) or South(S), player B can move Top (t) or Bottom (b) and player C can move Up (u) or Down (d). The payoffs given at the end of the game tree are always in the order of (A, B, C). a. What is the rollback equilibrium in this game? b. Explain the concept of rollback equilibrium. How did you attain it in this game? t B b N A S u C d N A S A N S 3, 0, 2 0, 1, 1 4, 4, 2 0, 0, 2 2, 1, 3 1, 1, 1 u C d 1, 1, 4

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2. Take the following two-player game, with payoffs written in the following
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Unformatted text preview: normal form matrix. The incumbent is deciding whether to invest in new technology to keep out challengers. The challenger is deciding whether to enter the incumbent’s market. Challenger Enter Don’t Enter Incumbent Invest 1, 2 0, 0 Don’t Invest 0, 0 2, 1 a. Suppose the incumbent was able to move first. Draw the game tree below. What is the rollback equilibrium? b. Suppose the challenger has the first move. Draw the game tree below. How does the rollback equilibrium change? Explain....
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## This test prep was uploaded on 04/22/2008 for the course ECON 242 taught by Professor Nonnenmacher during the Spring '06 term at Allegheny.

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242s01q2 - normal form matrix. The incumbent is deciding...

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