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Unformatted text preview: and finish the game. (2,0) player 1 (1,0) (0,0) u 1 (win) u 1 (lose) u 2 (lose) u 2 (win) So, she will choose (1,0) and win. (3,0) player 1 (2,0) (1,0) (0,0) player 2 u 1 (win) u 1 (lose) u 2 (lose) u 2 (win) (1,0) (0,0) u 1 (lose) u 1 (win) u 2 (win) u 2 (lose) 2 3. (a) Solve the game by backward induction. There are two solutions using backward induction. node: (1.1), (1.2), (2.1), (2.2), (3.1), (3.2) <1> L M’ u m’ l c’ => (2,3,3) <2> M M’ u m’ l c’ => (2,3,1) (b) Find two alternative solutions. node: (1.1), (1.2), (2.1), (2.2), (3.1), (3.2) <1> L M’ d u’(or d’) l l’ (or r’) => (2,0,1) <2> R M’ u d’ l l’ => (1,3,5) If each believes that the other will carry out that strategy, then their own strategy is best....
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This note was uploaded on 06/09/2011 for the course ECON 354 taught by Professor Econ during the Spring '11 term at University of Texas at Austin.
 Spring '11
 econ

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