Answered: Consider the game given. The top number…

Consider the game given. The top number is player 1’s payoff and the bottom number is player 2’s payoff. a. Find the SPNE. b. Find a Nash equilibrium that is not an SPNE.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consider the game given. The top number is player 1’s payoff and the bottom number is player 2’s payoff.
a. Find the SPNE.
b. Find a Nash equilibrium that is not an SPNE.

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Step 1: Define Nash equilibrium

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Step 2: Determine SPNE

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Step 3: Determine Nash equilibrium

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