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Consider the following payoff matrix, where the payoffs are profits in thousand $. Explanation of payoff: If Player 1 chooses Strategy A and player 2
Consider the following payoff matrix, where the payoffs are profits in thousand $.
Explanation of payoff: If Player 1 chooses Strategy A and player 2 chooses Strategy B then Player 1 gets $100,000 and Player 2 gets $50,000
Player 2
Strategy A B C
A 250, 200100, 50170, 280
Player 1
B 260, 140 270,270130, 130
C 265, 300120, 130125, 140
- Find the Nash equilibrium if the players make the decisionssimultaneously.
- Are there any dominant strategies in the game?
- Is this a prisoner's dilemma type problem? Explain why.
- Find the outcome if both players are risk averse and choose a maxi-min strategy.
- Now consider the game as sequential.How much would player 2 invest to be the first mover? Is there any potential for side payments? (one player offering the other to be 2ndmover) If so, who will pay and how much?
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