Economics 15.odt - d D 50 50 Serena C 90,10*You do this...

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Venus d c q-mix D 50, 50 80,20 50q+80 (1-q) Serena C 90,10 20,80 90q+20(1-q) * You do this part L (a) The game has at least one pure strategy Nash equilibrium. Yes there is a MSNE. We can find this by using a mixed strategy. (b) (c) D best response is (probability) p= Pr (D)by Serena 50 p+10(1‐p)=20p + 80(1‐p), 50 p+10‐10p=20p + 80‐80p 40 p+10= 80‐ 60p, 100 p= 70, p=70/100=.70 If Serena plays D with probability p=.70 and C with probability 1p =.30 *You find Venus best response using above example (d) Serena’s high payoffs from playing D or C

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