ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question 1
Bob.
Ann
north
Consider the following sequential-move game between Ann and
Вов
south
visky
ир
down
(2,6)
Ann
Nature left 50%
(2,5)
cold
hot
left 50% (3,10)
right 50%
(56)
(3,4)
(4,7)
External uncertainty is handled by an outside player called "Nature". Nature chooses "Left"
with probability 50%, "Right" with probability 50%.
A. Use backward induction to find the rollback equilibrium.
B. What are the rollback equilibrium payoffs?
C. How many strategies does each player have? For each player, list all his/her strategies.
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Transcribed Image Text:Question 1 Bob. Ann north Consider the following sequential-move game between Ann and Вов south visky ир down (2,6) Ann Nature left 50% (2,5) cold hot left 50% (3,10) right 50% (56) (3,4) (4,7) External uncertainty is handled by an outside player called "Nature". Nature chooses "Left" with probability 50%, "Right" with probability 50%. A. Use backward induction to find the rollback equilibrium. B. What are the rollback equilibrium payoffs? C. How many strategies does each player have? For each player, list all his/her strategies.
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