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) Consider the 2-player game given below. Player 1 can choose between T and B, player 2 chooses between R and L. The resulting
) Consider the 2-player game given below. Player 1 can choose between T and B, player 2 chooses between R and L. The resulting payoffs are given by the table. 12 L R 0,9-x 9,0 5,5-x T 10,8 (a) Consider first the case wherez-0 (and this is common knowledge). Find the set of strategies (pure or mixed) which are rationalizable, i.e. survive the iterated elimination of strategies which are never a best response. [3] (b) Explain the difference between a game of complete information and a game of incomplete information. How does one normally find an equilibrium for a game of incomplete information? [5] (c) Consider the case where the value of x is unknown to player 1, but known to player 2. Assume that can take only the values 0 (with probability 1/10) or 6 (with probability 9/10), and this is commonly known. Write down a corresponding normal form game that is suitable to find the (Bayes-)Nash equilibria of this game. Find all pure strategy (Bayes-)Nash equilibria of this game. [8]
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a The set of strategies that are rationalizable in this game with x 0 are T R and B L These are the ...Get Instant Access to Expert-Tailored Solutions
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