Max here 1004294 Game

-
Theory HWZ
17%6/-2022

① Players f :
, ,
£
Actions : ai =
{ Exit
immediately >
Exit this
quarter . Exit next
quarter}
=
{ I T N}
,
,

(a) Payoff
_
matrix

Firm it I T N
I (D O) , ( 0,2 ) ( 0 4) .

T
( 2,0) ( -1 ,
-

1) C- 1 , 1)
N (4 , s ) ( 1 ,
-1 ) ( -2 , 2) -

# No there domination of
, is no
strong players any strategy for both
.

However be dominated
,
strategy T can
by the player playing strategy
I and N with a mixed
strategy p 0-5 * I and d-f) 0.5 for N = or =
,

it results in the same

as
payoff .

Pure ( E)
(c)
strategy NE - N>
. ( I. N]

(d) finer strategy T Is dominated it from the

weakly we can remove
matrix p)
il
p
-

i
in I N

I (0-0) i 4)
N
@ 3) C-252)
,

her Firm 2 haae

strategy to Pca 3) =p Ragin ] tp
play
a -
:
,

Op -104 p) Hp
a-
a
-1
pK→ ]
-

0 =

Hp -2+2
p
2 =

Gp
F- b
'

i.
%
Cfp )
-

Mixed
strategy
=

@¥ ,
0
, %) , (43,7%1)
 L R
② T 1 I
.
-
-

I ,
I

1 -1
13
-
I ,
I ,

There is
equilibrium to improve
correlated
no
the
payoffs This is due to
.

player payoff being

a
's

symmetrical being obedient

switching will
or
cause one
of them to lose and out
the other to
improve
.
.

I
③ 2,2

E- in

◦÷÷
0,3

2 , I

'
" i

%:# ÷ .

i. SPNE
={ (Lt kl ) , ,

) , Payoff =L .z
)

(b) f fl Br, bl Br A

),(Lr,k
,

=/
,
,

PSNE
[ RI 8,2 2,2 0,3 0 >
3- 41 lil
, ,

Rr is 4 I >
4 0,3 0 ,
-3
*
Lb 1) 2 2 , I 1>2 2.
1-
tr 1,2 2 , I 1 ,z* 2,2
Payoff =
4,2 )
⑧ L
La@c1oo-4-wL.wL )

① •÷*•T
>

casoo-ai.ws )

in which Umm
Down the demands
path W
, Firm
says yes
and
employed
t≤ so ushers are :

Max L(100 - t ) -
wt Union :
Max WL
Firm i
w
£

wL*= wc )
= 100 -2L -
w

Foe
=
'%
By
:

2 Vu
roo -
2L - w =D =
f- ( 100 -
2W )
*

L= 100¥ '

-
So - W

WE 50
By FOC

L* °÷
'
since w* =
50 ,
=
-2g

5*1=(50-25)
*
results
which in @ ,

Payoffs =
Up = 25C (00-25) -
2560J = 62s

Uu = 25 ( so] = 12570

of the

Choosing L > SO as a
possible outcome
game
:

On ¥1250
UF > 625 ,

2500 -
wt > 625 ,
WL > 1250

what 1875 ,
WL > I -250

combination that satlftes the above condition

i.
Any
would suffice 1-or both
like 2=80 , w= 20
parties
SPNE
prefer compared
+• to .
⑤
✗

✗
✗

ca ] SPNE =
( Dfj , 4M )
(b)

DGH DGJ
UFHUEJUGHUGJ-D.PH DFS DF]

✗L(É3 ) 13 , 's

✗MÉÉ CS > 3)

:÷.÷÷::::÷ ""
,2Zi
13 ( 2,2
,
1) )

4L < 2. 2) 13,41 É
PM ' " 2)
( 3,4 ) ( 2,2 ) (3,4 )

(2)I ) Ci ) @ i ) Ci ) Ci )

There are
NE
many that is not SPR .

One of them
being @ 8h ,
✗ L )
⑥
¢800-2g 2qz)q (800-2%-2%39)
% >
≥
q
-

,
, • , ,

2
1
•

• s

>

Payoff Player 2- _
Too -2g .
-

Zqfqz
lk =
8009<-2%9 -

Zqi
dkz
Soo
Zq Her
-2g
= -
-
,

3¥ 0
= :

By Foe ,

Soo -

2g -

49,2--0

qz* =
so•j
q* = 200 -

Iq .

Player I Payoff gwen q=qF :

u, =
[Soo -

29 .
-
2600 -

Eq5Tq ,

[ -2g 400+9 ]q
=
too -
, ,

2
=
2100g .
-

g.

?g÷ = 400 -

2g .

By FOC
:

*
=
Zoo
g.

qt = zoo
-

ICH
= 100

SPNE =
( g.
*
, qi ) = 1200 ,
too ]

Price = Soo -

29 -2g , = 800-2221 2am -

=
200

Profits = ( Ui
, Uz )

¢800
= -
2% -
2¥ 200
,
[Soo - 24%-2 Cio
)
☐ too

= @0 000 ,
20 -000 )