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ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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
Transcribed Image Text:Problem 4
Consider a two-stage game where two players,
Ann and Beth, must first decide on a game to play
(either prisoner's dilemma or stag hunt), and, if they
agree, play that game. If they do not agree to play
the same game, neither player receives any payoff.
The game is summarized below:
2.2
Beth cooperate
defect
Ann cooperate
0,3
Beth prisoner's
dilemma
defect
Beth cooperate
3,0
Ann prisoner's
dilemma
stag hunt
stag hunt
0,0
defect
1,1
Beth prisoner's
dilemma
stag hunt
0,0
Beth
stag
3,3
stag
hare
0,2
Ann
hare
Beth stag
2,0
hare
1,1
a) Find the minimal proper subgames.
b) Find the SPNE.
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