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Consider a game in which there are two players, A and B. Player A moves first and chooses either Up or Down. If A chooses Up, the game is over, and each player gets a payoff of 2. If A moves Down, then B gets a turn and chooses between Left and Right. If B chooses Left, both players get 0; if B chooses Right, A gets 3 and B gets 1. Draw the tree for this game, and find the subgame-perfect equilibrium. Show this sequential-play game in strategic form, and find all of the Nash equilibria. Which is or are subgame-perfect? Which is or are not? If any are not, explain why. What method of solution could be used to find the subgame-perfect equilibrium from the strategic form of the game?
This document contains various important questions and their appropriate answers in the subject field of Economics.
Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.
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