Econ398_HW4 - package of ice-cream Assume the value of the...

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Econ 398 Homework 4 Due Friday, February 20, 2009 1) Dixit & Skeath, Chapter 6, problem 1 2) This is a variant on the War of Attrition discussed in class. In this example, each player places no value on the time spent waiting for the other player to concede (so that waiting isn’t costly), but the object loses value as time passes (like a rotting animal carcass, or a melting
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Unformatted text preview: package of ice-cream). Assume the value of the object to each player ݅ after ݐ units of time is ݒ ௜ െ ݐ while a 50% chance of obtaining the object is ሺݒ ௜ െ ݐሻ/2 . Specify players, strategies, and payoff functions (carefully) for this game. Graph out the payoff functions, construct the best response curves, and find the Nash Equilibria of this game....
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