Question
Consider the following game in strategic form Player 2 A B U 4,2 0, 0 Player 1 M 0,0 5, 4 D 0,0 7,1
Consider the following game in strategic form Player 2 A B U 4,2 0, 0 Player 1 M 0,0 5, 4 D 0,0 7,1 Assume the game is repeated T = 2 periods. Does there exist an SPNE in pure strategies such that (M, B) prevails in t = 1? If yes, give a precise description of strategies by specify- ing actions chosen after each history for each t and for each player, and verify that there are no profitable one-stage-deviations in all subgames by each player (Hint: In every second period subgame, (U,A) or (D, B) must be played depending on first period history).
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
538453257, 978-0538453257
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