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JDIC (Mod1)

! " #
$ %&
'

1
JDIC (Mod1)

'
*

# + "
* +

' "
" -
." " " -
" " /" " "
"-
." % & -

Challenger

In Out
Incumbent
The first number is the
A F 1, 2
payoff of the challenger.
The second number is the
payoff of the incumbent.
2, 1 0, 0
,

2
JDIC (Mod1)

# + "
Player 1
" " & "
-
" H T
&" " "& " 1
" . -
' + 2 Player 2 Player 2
" / "
" &1 . H T H T
$ " % & "
& 3
& "4 "
" " 5 " -1, 1 1, -1 1, -1 -1, 1
& 2
-
" & / &
2 -

4 # +5

'
7" + &" &" "
+ 8
7" % & &" " +8
2 "
" -
' " % &
" -

3
JDIC (Mod1)

3 * +

." * +
3
" "
&" " " " +
&" " " " "
+
&" " % & " " "
+
" + " "
+ " "
"

' + + + " *
+ " -
' % & " +
" %

4
JDIC (Mod1)

' " a path from x0


a node
x0 to x4
""
"
& 4" & x1 x2

5
/
" # " x3
" " x4 x5 x6
&

x7 x8
an edge connecting
nodes x1 and x5
;

a path from x0
' # x0 to x4
/ / )/---/ /
"" =
> / ? / /---/ -
7 " " "
- x1 x2
7 " #
"
" "-
x3
." " " x4 x5 x6
" "-

* 3*</* /*)/*9
" ")- x7 x8
* 3*,/* /*</* /*6
" ",
<

5
JDIC (Mod1)

x0
." <
" "
&" " " "

." > < x1 x2


<- ."
*< * /*
@ & /
" "
x3
" "
x4 x5 x6
" " -
* )3*9
*) "
> " "
*9 *< " " x7 x8
" *) *<

x0
" "
-
/
" " " " x1 x2
# -
' " "
&" " x3
" x4 x5 x6
* ,3*,/*0/*6/*9/
*:

x7 x8

6
JDIC (Mod1)

Player 1
' " "
H T
-
@ " "
/" Player 2 Player 2
" & "
" H T H T
+ "

" -1, 1 1, -1 1, -1 -1, 1

Player 1
' " "
H T
#
+ &" " Player 2 Player 2
" "
H T H T

-1, 1 1, -1 1, -1 -1, 1

7
JDIC (Mod1)

'
-
"
+ &" " " "
-

" 2

2
' 4 " 5
@ "4 " 5

' @ "
2 , 1 0 , 0
"
1 , 2 1 , 2

8
JDIC (Mod1)

/
-
' 4 5/
" / " "
/&" " "

' a strategy for Player 1


player 1: H
- H T

" Player 2 Player 2


+
&" " " " H T H T
-
&" " -1, 1 1, -1 1, -1 -1, 1
"
" a strategy for player 2: H if player 1 plays
H, T if player 1 plays T (written as HT)

Player 1’s payoff is -1 and player 2’s payoff is


1 if player 1 plays H and player 2 plays HT
:

9
JDIC (Mod1)

# + "
2
1
.
2
1 1/1 .
1 1/. .
. 1/1 .
. 1/. .

2 11/1./.1 ../
+ -

# + "
."
!

11 1. .1 ..
1 -1 , 1 -1 , 1 1 , -1 1 , -1

. 1 , -1 -1 , 1 1 , -1 -1 , 1

<

10
JDIC (Mod1)

! " #
." ! " #
" ! "
# -

@ ! " #
1 & " ! " #

" "

@ " ! " # "

11
JDIC (Mod1)

! " #
Challenger
.& ! " #
4 /' 5
In Out
4 /@ " 5
Incumbent
" ! " 1, 2
A F
# % 8
! " 2, 1 0, 0

' @ "
2 , 1 0 , 0
"
1 , 2 1 , 2

( + ! " #

! " #
! " #
! " #
"

12
JDIC (Mod1)

' Player 1

" H T
& "
Player 2 Player 2
'
H T H T
&3
+ "
-1, 1 1, -1 1, -1 -1, 1
"
"

a subgame

3 *

Player 2
E F
Player 1
Player 1
C D
G H 3, 1
Player 2
E F 2, 0
1, 2 0, 0
Player 1
G H 3, 1
Player 1
G H
1, 2 0, 0

1, 2 0, 0
6

13
JDIC (Mod1)

! " #

'! " #
" " ! "
# ! " #
+ " -

! " # ! "
# -

.& ! " #
4 /' 5 -
4 /@ " 5
! " # "
-

Challenger
Incumbent
In Out A F
Incumbent

A F 1, 2 2, 1 0, 0

Accommodate is the Nash


2, 1 0, 0 equilibrium in this subgame.

14
JDIC (Mod1)

@ ! " # 3
%&
& ""
." + %& " "

Challenger

In Out
Incumbent

A F 1, 2
The first number is the
payoff of the challenger.
2, 1 0, 0 The second number is the
payoff of the incumbent.
;

@ ! " # 3
%&
Player 1
C D
Player 2
E F 2, 0

Player 1
G H 3, 1

1, 2 0, 0

! " # 4 /5
/

)<

15
JDIC (Mod1)

* ! "
#

+
"
! " # "
%& -

$ %& 3

Player 1
C D

Player 2 Player 2
E F G H

2, 1 3, 0 0, 2 1, 3

! " # 4 / 15-
A
/ 1
-

16
JDIC (Mod1)

! " # 3

Player 1
C E
D

Player 2 Player 2 Player 2


F G H I J K

0, 1 1, 0 1, 1 2, 1 2, 2 1, 3

! " # 4 /@1B5-

@ / 1
/ B -

))

! " #

Player 1
C E
D

Player 2 Player 2 Player 2


F G H I J K

0, 1 1, 0 1, 1 2, 1 2, 2 1, 3

! " # 4 /@1B5-
A
@ / 1
/ B -

),

17
JDIC (Mod1)

! " #

Player 1
C E
D

Player 2 Player 2 Player 2


F G H I J K

0, 1 1, 0 1, 1 2, 1 2, 2 1, 3

! " # 4 /@ B5-
A
@ /
/ B -

)0

'" & 3
- ." # q1
q 2/ + -
." " &3
@ " # q1 ≥<-
@ + q1 " " # q2 ≥<-
." % P(Q)=a –Q &" a
Q=q1+q2
." i # qi Ci(qi)=cqi-
3
u1(q1, q2)=q1(a–(q1+q2)–c)
u2(q1, q2)=q2(a–(q1+q2)–c)

)6

18
JDIC (Mod1)

@ " ! " #
%&
7 + ’ q1 ≥<
’ q1 - ." /& +
" -
." & + ’ - ." / + "

)9

+ ’ q1 ≥< ’
q1-
* u2(q1, q2)=q2(a–(q1+q2)–c)
> 0 ≤ q2 ≤ +

@ 3a – 2q2 – q1 – c = 0

@ ’ ,
R2(q1) = (a – q1 – c)/2 q1 ≤ a– c
=0 q1 > a– c

Note: Osborne used b2(q1) instead of R2(q1)

):

19
JDIC (Mod1)

+ ’ -! +
’ - ." / % & ’
q 1- 1 / ’
* u1(q1, R2(q1))=q1(a–(q1+R2(q1))–c)
> 0 ≤ q1 ≤ +

." /
* u1(q1, R2(q1))=q1(a–q1–c)/2
> 0 ≤ q1 ≤ +

@ 3(a – 2q1 – c)/2 = 0


q1 = (a – c)/2

);

( (a – c)/2, R2(q1) ), &"


R2(q1) = (a – q1 – c)/2 q1 ≤ a– c
=0 q1 > a– c
." / " # (a – c)/2/
" # R2(q1) "
# q 1-
." !" ( (a – c)/2, (a – c)/4
).
@ " # (a – c)/2/ "
# (a – c)/4-

,<

20
JDIC (Mod1)

@
q1=(a – c)/2
q1(a–(q1+ q2)–c)=(a–c)2/8

@
q2=(a – c)/4
q2(a–(q1+ q2)–c)=(a–c)2/16

." # 3(a – c)/4.

@
q1=(a – c)/3
q1(a–(q1+ q2)–c)=(a–c)2/9

@
q2=(a – c)/3
q2(a–(q1+ q2)–c)=(a–c)2/9

." # 2(a – c)/3.

21
JDIC (Mod1)

" / / "
- ." + " &
" # qm-
* qm (a–qm–c)
> 0 ≤ qm ≤ +

@ 3a – 2qm – c = 0
qm = (a – c)/2

qm=(a – c)/2
qm(a–qm–c)=(a–c)2/4

,)

# + $
4 5
.& 3 -
" " " - ."
p1 p2/ + -
." " &-
@ " p1 ≥<-
@ + p1 " " p2 ≥<-
." # " 3q1(p1,
p2) = a – p1 + bp2
." # " 3q2(p1,
p2) = a – p2 + bp1
." i # qi Ci(qi)=cqi-

,,

22
JDIC (Mod1)

# + $
4 5

+ ’ p1 ≥<
’ p1 -
* u2(p1, p2)=(a – p2 + bp1 )(p2 – c)
> 0 ≤ p2 ≤ +

@ 3a + c – 2p2 + bp1 = 0
p2 = (a + c + bp1)/2
@ ’ ,
R2(p1) = (a + c + bp1)/2

,0

# + $
4 5

+ ’ -! +
’ -@ % & ’ p 1-
1 / ’
×R2(p1) )(p1 – c)
* u1(p1, R2(p1))=(a – p1 + b×
> 0 ≤ p1 ≤ +

." /
×(a + c + bp1)/2 )(p1 – c)
* u1(p1, R2(p1))=(a – p1 + b×
> 0 ≤ p1 ≤ +

@ ×(a + c + bp1)/2+4–1+b2/2) (p1 – c) = 0


3a – p1 + b×
p1 = (a+c+(ab+bc–b2c)/2)/(2–b2)

,6

23
JDIC (Mod1)

# + $
4 5

((a+c+(ab+bc–b2c)/2)/(2–b2), R2(p1) ),
&" R2(p1) = (a + c + bp1)/2

@ "
(a+c+(ab+bc–b2c)/2)/(2–b2)/
" R2(p1) "
p1-

,9

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