Question
Player 1 and Player 2 are competing against each other in a gambling game. P1 has $400 while P2 has $500. Each player can choose
Player 1 and Player 2 are competing against each other in a gambling game. P1 has $400 while P2 has $500. Each player can choose to either pass or gamble, not knowing the choice of the other player. If a player passes, then they keep the money they started with. If P1 gambles, they win $200 with probability 1/2, or lose their entire $400 with probability 1/2. If P2 gambles, they win $200 with probability 1/2, or lose $200 with probability 1/2. The outcomes are independent. After both players have made their choice, whoever has a higher amount at the end gains an extra $400.
a) Draw the Kuhn tree for this game
b) Put this game into strategic form
c) Find the safety levels for each player
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