Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Michelle wants to eat some cereal but there's no cereal left, and she is too lazy to go the store herself. She is thinking

 

 

image

Michelle wants to eat some cereal but there's no cereal left, and she is too lazy to go the store herself. She is thinking of sending one of her kids to the store. She can choose to send Aggie, Brian, or Selena. Whichever kid is sent will be allowed to pick one of the three cereal brands available at the store: Corn Flakes, Capin Crunch, or French Toast Crunch. Cereal boxes at this store are large enough so that everyone in the family will be able to eat from it once it's home. The enjoyment level each member of the family gets from the three different brands is given in the following table. Whoever ends up going to the store will actually have to enjoyment level by 2. Family member Michelle Aggie Brian Selena Enjoyment of Corn flakes 5 3 1 3 Enjoyment of Capin crunch 0 2 3 3 Enjoyment of French toast crunch 0 1 2 2 In what follows, assume that Michelle's strategies and payoffs are listed first, Aggie's are listed second, Brian's third, and Selena's fourth. Part 1 : Construct an extensive form to represent this game. Part 2 : Consider the strategy combination {Brian, Capin C, Capin C, Capin C}. a) Is it a Nash Equilibrium? If so, explain why. If not, state who would benefit by switching unilaterally to a different strategy. b) Is it a Subgame Perfect Equilibrium? Explain your answer. c) Which of the Capin Crunch strategies inside it is/are non-credible threats? d) Now consider {Aggie, Capin C, Capin C, Capin C}. Is this strategy combination a Nash Equilibrium? If so, explain why. If not, state who would benefit by switching unilaterally to a different strategy. Part 3: Find all the Subgame Perfect Equilibria for this game.

Step by Step Solution

3.42 Rating (152 Votes )

There are 3 Steps involved in it

Step: 1

a If Mike only has access to options A and B and he is naive he will switch to option B when he realizes that option A is not as good as he thought Lets consider the utility of Mike in each period In ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Materials Management

Authors: Arnold J. R. Tony, Gatewood Ann K., M. Clive Lloyd N. Chapman Stephen

8th edition

9386873249, 134156323, 978-9386873248

More Books

Students also viewed these Economics questions

Question

What is value added, and how is it achieved?

Answered: 1 week ago

Question

Can MRP and kanban be used at the same time and if so, how?

Answered: 1 week ago

Question

Describe the process of sensory memory.

Answered: 1 week ago