Rose and Colin play the following dynamic game with Rose moving first. In her first move, Rose has a choice of either 0 or 3. If she chooses 3, then Rose and Colin play G3 with Colin moving first. If Rose chooses 0 in her first move, then Colin can play either 1 or 2 in his first move. If he plays 1, then Rose and Colin play G₁ with Rose moving first, and if he plays 2, then Rose and Colin play G₂ with Rose moving first. Draw the game tree associated with this game, and find the backwards induction solution.
Rose and Colin play the following dynamic game with Rose moving first. In her first move, Rose has a choice of either 0 or 3. If she chooses 3, then Rose and Colin play G3 with Colin moving first. If Rose chooses 0 in her first move, then Colin can play either 1 or 2 in his first move. If he plays 1, then Rose and Colin play G₁ with Rose moving first, and if he plays 2, then Rose and Colin play G₂ with Rose moving first. Draw the game tree associated with this game, and find the backwards induction solution.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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