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Unformatted text preview: Econ 171 Spring 2010 Problem Set 2 Due May 6 Important: hand in only the twostar problems. The notation a.b denotes problem number b from Chapter a in Watson. * Problem 1 R , L 1 b a 2 Figure 1: An extensive game In the game in Figure 1, solve for the backwardsinduction 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 backwardsinduction outcome. (c) Now construct a different set of payoffs such that the unique backwardsinduction outcome is r 3 , but the backwardsinduction strategies are different than in the game you constructed in the previous part....
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This note was uploaded on 12/26/2011 for the course ECON 171 taught by Professor Charness,g during the Fall '08 term at UCSB.
 Fall '08
 Charness,G

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