{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

PS2_001

# PS2_001 - Econ 171 Spring 2010 Problem Set 2 Due May 6...

This preview shows pages 1–2. Sign up to view the full content.

Econ 171 Spring 2010 Problem Set 2 Due May 6 Important: hand in only the two-star problems. The notation a.b denotes problem number b from Chapter a in Watson. * Problem 1 R 0 , 0 L 1 b a 2 Figure 1: An extensive game In the game in Figure 1, solve for the backwards-induction strategies and outcomes when the four missing payoffs are filled in with each possible permutation of the four numbers {- 2 , - 1 , 1 , 2 } . * Problem 2 R 1 L 1 1 r 1 a,b l 1 2 r 2 e,f l 2 c,d 2 R 2 L 2 g,h 1 r 3 k,l l 3 i,j 2 Figure 2: Another extensive game (a) List the strategies available to each player in the game shown in Figure 2. (b) Construct payoffs ( a,b,c,d,e,f,g,h,i,j,k,l ) such that the terminal node r 3 , with payoffs ( k,l ), will be the unique backwards-induction outcome. (c) Now construct a different set of payoffs such that the unique backwards-induction outcome is r 3 , but the backwards-induction strategies are different than in the game you constructed in the previous part.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}