homework 1 answers - at its initial node is to pass...

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SOLUTIONS FOR ECON 398 HOMEWORK 1 Professor Ozdenoren 1) a) For player 1 available strategies are {Out, In}. For player 2 available strategies are {Accommodate, Price War}. Equilibrium outcome is (2,2) and equilibrium strategies are In for player 1 and Accommodate for player 2. b) For player 1 available strategies are {Ul,Ur,Dl,Dr }. For player 2 available strategies are {(L if U, L if D), (L if U, R if D), (R if U, L if D), (R if U, R if D) }. Equilibrium outcome is (3,3) and equilibrium strategies are Dl for player 1 and (L if U, L if D) for player 2. 2) Offense has 8 strategies and the defense has 9 strategies. Offense’s equilibrium move
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Unformatted text preview: at its initial node is to pass. Defense’s equilibrium strategy is Run Defense if Offense plays Run and Pass Defense if Offense plays Pass. 3) In the last round, player B would offer player A none of the cake. In the previous round (round 3), player A would keep 2/7 th of the cake and offer player B 2/7 th of the cake. In round 2, player B would offer player A 2/7 th of the cake. Thus in the first round player A offers player B 4/7 th of the cake and player B immediately accepts. So in equilibrium, player A gets 3/7 th and player B gets 4/7 th of the cake....
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