Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 13, Problem 11P
To determine
The equilibrium using backward induction in the “centipede game”.
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Students have asked these similar questions
Consider the game shown below. In this game, players 1 and 2 must move at the same time without knowledge of the other player’s move. Player 1’s choices are shown in the row headings (A/B), Player 2’s choices are shown in the column headings (C/D). The first payoff is for the row player (Player1) and the second payoff is for the column player (Player 2).
Player 2
Player 1
C
D
A
8, 3
2, 4
B
7, 4
3, 5
Pick the correct answer:
Player 1:
Has a dominant strategy to choose A
Has a dominant strategy to choose B
Has a dominant strategy to choose C
Has a dominant strategy to choose D
Does not have a dominant strategy
Player 2:
Has a dominant strategy to choose A
Has a dominant strategy to choose B
Has a dominant strategy to choose C
Has a dominant strategy to choose D
Does not have a dominant strategy
The Nash equilibrium outcome to this game is:
A/C
A/D
B/C
B/D
There is no pure strategy Nash equilibrium for this game
Felix and Jocelyn are arrested and charged with armed
robbery. The police interview both suspects separately
about their involvement in the crime. Each suspect has to
make a decision. They can betray the other suspect by
confessing that they both committed the crime, or they can
cooperate with the other suspect by remaining silent.
The table shows the sentences that Felix and Jocelyn will
receive given their choices. Use the table to answer
the question.
What will be the dominant strategy outcome for Felix
and Jocelyn?
They both get 12 years.
O They both get 10 years.
Felix gets 5 years, and Jocelyn gets 15 years.
Jocelyn gets 5 years, and Felix gets 15 years.
Felix
Stay
silent
Confess
Stay silent
Jocelyn gets
10 years
Felix gets
10 years
Jocelyn
Jocelyn gets
15 years
Felix gets
5 years
Confess
Jocelyn gets
5 years
Felix gets
15 years
Jocelyn gets
12 years
Felix gets
12 years
Tyler and Pam are arrested and charged with armed robbery.
The police interview both suspects separately about their
involvement in the crime. Each suspect has to make a
decision. They can betray the other suspect by confessing that
they both committed the crime, or they can cooperate with the
other suspect by remaining silent.
The table shows the sentences that Tyler and Pam will receive
given their choices. Use the table to answer the question.
What will be the dominant strategy outcome for Tyler
and Pam?
They both get 10 years.
Pam gets 5 years, and Tyler gets 15 years.
O
They both get 12 years.
O Tyler gets 5 years, and Pam gets 15 years.
Tyler
Stay
silent
Confess
Stay silent
Pam gets
10 years
Tyler gets
10 years
Pam gets
15 years
Pam
Tyler gets
5 years
Confess
Pam gets
5 years
Tyler gets
15 years
Pam gets
12 years
Tyler gets
12 years
Chapter 13 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
Knowledge Booster
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