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HW-2 - Economics 11 Winter 2011 HW#2 Due Tuesday February 1...

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Unformatted text preview: Economics 11, Winter 2011: HW #2 Due Tuesday February 1 at beginning of class 1. Sketch the extensive form of the Prisoner’s Dilemma (Mob) in which Chuck is questioned first and Ralphie sees what Chuck has decided. Find all the subgame perfect Nash equilibrium of this game. Is this different from what happens when questioning is simultaneous? 2. Charlie is 10 years old. His parents have gone out for the night and left him with the Babysitter. His parents want Charlie to go to bed at 9PM. If he does they will pay the Babysitter $30; otherwise they will give the Babysitter $20. Charlie has to decide whether or not to go to bed at 9PM. After seeing whether Charlie goes to bed at 9PM, the Babysitter can give Charlie $X or nothing. Charlie wants a late bedtime but he also likes money: he values not going to bed at 9PM as the equivalent of $5. The Babysitter cares only about money. Both Charlie and the Babysitter know all this....
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HW-2 - Economics 11 Winter 2011 HW#2 Due Tuesday February 1...

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