EconS491_Recitation5_Spring2011

Cdescribethebackwardinductionoutcomeofthisgameforanyfi

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Unformatted text preview: 0 . Thus, in round 4 0 . Continuing in this fashion, we find that, in equlibrium, each player will choose S any time he is on the move. c. Describe the backward induction outcome of this game for any finite integer k For any finite k, the backward induction outcome is that player 1 chooses S in the first round and each player receives on dollar. Because if neither player choose to step by the end of the kth round, then both players obtain zero 1 0 . 3 Exercise 8­Chapter 15­Watson a. Describe the strategy spaces of the players , 0, ∞ 0, ∞ Each player selects A or B, picks a positive number when (A, B) is chosen, and picks a positive number when (B, A) is chosen. P1 and P2 Simultaneously choosing A or B BB AA AB u1 u2 BA ⎡ x1 + x 2 ⎤ ⎢1 + x + x ⎥ 1 2 ⎢ ⎥ ⎢ x1 + x 2 ⎥ ⎢1 + x + x ⎥ 1 2⎦ ⎣ 5 5 ⎡ x1 + x 2 ⎤ ⎢1 + x + x ⎥ 1 2 ⎢ ⎥ ⎢ x1 + x 2 ⎥ ⎢1 + x + x ⎥ 1 2⎦ ⎣ -1 -1 b. Compute the NE of this game It is easy to see that when one of the players chooses A and the other selescts B, then 0 1 1 And that 1 1 ∞ Thus, each has a higher payo...
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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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