EconS491_Recitation5_Spring2011

# 4 byoptimally 1 focswithrespectto 1 0 1

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Unformatted text preview: ff when both choose A. Further, B equilibrium. The Nash Equilibria of this game are given by 1, 1 will never be selected in , where are any positive numbers. c. Determine the subgame perfect equilibria If the game proceeds through AB or BA, every player i maximizes his payoff selecting . 4 by optimally 1 FOCs with respect to : 1 0 1 Which implies that any combination of solves this maximization problem (?): 0, ∞ 0, ∞ Hence, equilibrium payoffs after AB or BA are: 0 1 1 And the reduced form game becomes: Thus, the SPNE of this game is , where 5 0, ∞ 0, ∞ Exercise 1­Chapter 8­Harrington Consider the game “Galileo and the Inquisition” below: a. Find all Nash equilibria. The strategic form games are shown in the following figures: Inquisitor: Torture Galileo Urban VIII DNR R C/C C/DNC DNC/C DNC/DNC 3, 5, 3 3, 5, 3 3, 5, 3 3, 5, 3 5, 3, 4 5, 3, 4 4, 1, 5 1, 2, 1 Inquisitor: Do Not Torture Galileo Urban VIII DNR R C/C C/DNC DNC/C DNC/DNC 3, 5, 3 3, 5, 3 3, 5, 3 3, 5, 3 5, 3, 4 5, 3, 4...
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## This note was uploaded on 02/02/2014 for the course ECONS 424 taught by Professor Felixmunoz-garcia during the Spring '11 term at Washington State University .

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