Question

Question 2 Consider the following extensive form game. R 2 a А/ B 2,3 / 1 \ь 3, x 3,0 1, Each value of x defines a different game.

Answer 1

Por x=2 At node, 1 player 2 will choose A as, 370, and at node Il player 2 will choose b as 271 So, the game becomes 2,3 3,0 1,1 3,2 and at first node player 1 will choose R as 372. So, the fect equs 2,3 3,2 subgame perfect equ (R, Ab) 27 the normal form game - Aa Ab Ba Bb PA L 2,3 2,3 3,0 3,07 nash equal 37 when, 2 P 1 chooses L, P2 will choose Aa and Ab as 3 0 . when, p2 chooses ta player 1 will choose L as 271. 80, (2, A a) is a when, player 1 chooses R 1 then, player 2 will choose Aa or Ba iff AL1 and will choose Aban ar Bb if x > 1. . TP P2 choose Ab, then pl will choose & as 372 and if p2 chooses Bb.

I player 1 may choose R or L. so, nash equm equilibria - (2, Aa) and (R, A b) & and (R, B b) iff nyl and only, (2, Aa) iff a L1