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A fight with imperfect information about strengths:-
Two people are involved in a dispute. Person 1 does not know whether person 2 is strong or weak; she assigns probability α to person 2's being strong. Person 2 is fully informed. Each person can either fight or yield.
Each person's preferences are represented by the expected value of a Bernoulli payoff function that assigns the payoff of 0 if she yields (regardless of the other person's action) and a payoff of 1 if she fights and her opponent yields; if both people fight then their payoffs are (-1, 1)if person 2 is strong and (1, -1)if person 2 is weak. Formulate this situation as a Bayesian game and find its Nash equilibria if α < ½ and if α > ½.
What is game theory? What is a Nash Equilibrium or Nash equilibriums in this game?
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