d. Solve the game by the Rollback method. Identify the dominant strategies and circle the Nash Equilibrium for each subgame and write it above its starting node. How has the penalty changed the firm's behavior?

d. Solve the game by the Rollback method. Identify the dominant strategies and circle the Nash Equilibrium for each subgame and write it above its starting node. How has the penalty changed the firm's behavior?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 2MC

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Question

Nash Equilibrium
(NE)
A:
Period 1
B:
A
A: 4
A: 2
B: 1
B: 2
Period 2
Nash Equilibrium
(NE)
Nash Equilibrium
(NE)
A:
A:
B:
B:
A: 6
A: 4
A: 7
A: 5
A: 4
A: 2
A:5
A: 3
B: 6
B: 7
B: 4
B: 5
B: 7
B: 8
B:5
B: 6
d.
Solve the game by the Rollback method. Identify the dominant
strategies and circle the Nash Equilibrium for each subgame and write it
above its starting node.
е.
How has the penalty changed the firm's behavior?

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