Feb 3 2011 - February 3 2011 Lecture 9*Midterm next Tuesday 8th Feb Rotten Kid Theorem Low Effort(100 80 No Bequest Subgame Son High Effort(90 120

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**Midterm next Tuesday, 8th Feb** Rotten Kid Theorem Normal Form (Low, Small) Mom Small Large Low (120*, 60) (140*, 40) Son High (110, 90) (130, 110*) - Modeled as a both a simultaneous and sequential game - Sequential: Son puts in effort and mother dies later and leaves him something - Simultaneous: When she may update her will every month, year, etc. and the son can ʼ t tell what he will get, so it becomes hard to choose which effort to put in Left (L), Right (R), Up (U), Down (D), East (E), West (W) - Suppose there are two players, Player #1 and Player #2 and they play a game with multiple rounds - Here we ʼ ll just make it two, to keep things relatively simple - In a complex game tree, there can be both a sequential portion and a simultaneous portion of a game - Here we see the Extensive form of the game: - Player 1 has the option to go Left of Right - Player 2 has the option to go Up or Down - And after Player 2 chooses Up or Down, Player 1 has the option to choose East or West - However, we cannot split the simultaneous part of the game, and therefore we a two player subgame U February 3, 2011 - Lecture 9
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Feb 3 2011 - February 3 2011 Lecture 9*Midterm next Tuesday 8th Feb Rotten Kid Theorem Low Effort(100 80 No Bequest Subgame Son High Effort(90 120

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