3. DON'T MESS WITH ME GAME TREE. Suppose Player #1 (P1) anticipates the possibility of being challenged by rival Player #2 (P2). To discourage P2 from challenging P1 tomorrow, P1 could invest in mixed martial arts training today, thereby making P1 a more formidable rival in case it has to battle tomorrow. Suppose the game tree below accurately models this dynamic game. TIP: Review the dynamic games slides to refresh your memory about analyzing games trees and finding SPNE. a) b) P1 Fight (F) (100,-50) Challenge (C) MMA Training (M) Give Up (G) P2 (-40, 100) Do Not (D) (60,0) fight (f) (-20, 150) challenge (c) Pl No Training (N) give up (g) P2 (0, 100) do not (d) (100, 0) Find all Subgame Perfect Nash Equilibria (SPNE) of this game. TIP: What is the definition of SPNE? In the subgames in the game tree directly following P1's choice to invest in MMA Training, identify ALL of the noncredible threats and explain why each is noncredible.

3. DON'T MESS WITH ME GAME TREE. Suppose Player #1 (P1) anticipates the possibility of being challenged by rival Player #2 (P2). To discourage P2 from challenging P1 tomorrow, P1 could invest in mixed martial arts training today, thereby making P1 a more formidable rival in case it has to battle tomorrow. Suppose the game tree below accurately models this dynamic game. TIP: Review the dynamic games slides to refresh your memory about analyzing games trees and finding SPNE. a) b) P1 Fight (F) (100,-50) Challenge (C) MMA Training (M) Give Up (G) P2 (-40, 100) Do Not (D) (60,0) fight (f) (-20, 150) challenge (c) Pl No Training (N) give up (g) P2 (0, 100) do not (d) (100, 0) Find all Subgame Perfect Nash Equilibria (SPNE) of this game. TIP: What is the definition of SPNE? In the subgames in the game tree directly following P1's choice to invest in MMA Training, identify ALL of the noncredible threats and explain why each is noncredible.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.7P

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