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2. Consider the policy advice game with the following payoff matrix. Suppose that the types s and t of the policy maker are equally
2. Consider the policy advice game with the following payoff matrix. Suppose that the types s and t of the policy maker are equally likely and that the expert can send either message m or n. Recall that each cell of this payoff matrix records both the expert's and the policy maker's payoff from the corresponding type-action combination. a b C S 3,3 0,0 2,2 t 0,0 3,3 2,2 a. If type s sends message m with probability .6 and type t sends message n with probability .55, what is the posterior belief of the policy maker when he observes message m? Use Bayes's rule to find your answer. b. Is there a Nash equilibrium in which type s sends message m with probability .6 and type t sends message n with probability .55? c. Is there a Nash equilibrium in which type s sends message m with probability .6 and type t sends message n with probability .9? d. What's going on?
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