Exercise 3.12. Three players, Avinash, Brian and John, play the following game.Two cards, one red and the other black, are shuffled well and put face down on thetable. Brian picks the top card, looks at it without showing it to the other playersGAME THEORY - Giacomo Bonanno124(Avinash and John) and puts it back face down. Then Brian whispers either "Black"or "Red" in Avinash's ear, making sure that John doesn't hear. Avinash then tellsJohn either "Black" or "Red". Finally John announces either "Black" or "Red" andthis exciting game ends. The payoffs are as follows: if John's final announcementmatches the true color of the card Brian looked at, then Brian and Avinash give $2each to John. In every other case John gives $2 each to Brian and Avinash.(a) Represent this situation as an extensive-form game.(b) Write the corresponding strategic form (or normal form) assuming that theplayers are selfish, greedy and risk neutral.

(a) The extensive-form game representation of this situation can be illustrated as follows (b) The…

Answered: Exercise 3.12. Three players, Avinash,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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