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urgent in 2 hrs A thief (player T) has seen a possible victim and is deciding whether to attack (A) or to pass (P). If
urgent in 2 hrs
A thief (player T) has seen a possible victim and is deciding whether to attack (A) or to pass (P). If he attacks, the victim (player V) has to decide whether to defend (D) or surrender (R). If the thief does not attack, both players get a zero payoff. If the thief attacks and the victim surrenders, the thief obtains a quantity of 2000 HK dollars from the victim; if the victim defends, the thief obtains only gets 1000 HK dollars from the victim. When the victim defends, a violent dispute occurs and both the thief and the victim suffer a cost for the fight (damage, etc.) equivalent to c HK dollars for each of them. a. Model this situation as an extensive form game and draw a game tree to represent the extensive form game. [8 points] b. Suppose c=1200. Use your game tree in part (a) to find all the backward induction equilibrium (or equilibria) of the extensive game. [8 points] c. Use your game tree in part (a) to find all the backward induction equilibrium (or equilibria) of the extensive game depending on the value of c. [10 points]Step by Step Solution
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