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Unformatted text preview: (Assume it costs nothing to enter the race.) The incumbent then has to decide whether she will stay in the race for a month or drop out. If she stays, then the campaign goes on for a month and costs each candidate $500,000. The challenger then has to decide whether he will stay in the race for another month or drop out. If he stays in, both candidates pay an additional $500,000 and at the end of that month the incumbent has to decide what to do. The game continues in this way until one of the candidates drops out or runs out of money. Each candidate prefers winning at lower cost to winning at higher cost; winning at any cost to losing; and losing at lower cost to losing at higher cost. What is the extensive form for this game and the backwardsprogramming solution? In light of this solution, is it clearer why a candidate might want to amass a large campaign chest?...
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This note was uploaded on 12/25/2010 for the course PO 137 taught by Professor Power during the Fall '10 term at University of California, Berkeley.
 Fall '10
 Power

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