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2. Consider the following normal form game: b C -3, 1 1, 5 3,1 B -2.3 -3, 1 -1,3 C -3.7 -1,3 2,6 (a) Find
2. Consider the following normal form game: b C -3, 1 1, 5 3,1 B -2.3 -3, 1 -1,3 C -3.7 -1,3 2,6 (a) Find at least three NE for the static game and calculate the corresponding NE payoffs for both players. (b) Suppose that the above described stage-game is played twice (the players observe each other's action choices for the first round before the second round). A player's payoff is the undiscounted sum of the payoffs form both rounds. Is this a game of perfect information? (No need to draw the game tree). (c) Consider the twice-played game. Construct some SPE strategies such that (C, c) is played in the first stage. What are the expected payoffs in that equlibrium? Compare with part (a). (Hint. Use a bad stage NE as the 'punishment' and a good NE as the 'reward'.)
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