Game Theory Worksheet
Description
2. Ada and Bob each have an opportunity to contribute money to an investment project. Ada can either contribute either $1,000, $2,000, or $3,000. Bob can contribute either $1,000 or $2,000. If the sum of Adas and Bobs contributions is $3,000 or higher, the project will succeed and it will provide benefits worth $2500 to each of them. If the sum of their contributions is less than $3,000, their contributions are returned to them and the project is not undertaken.A) Suppose that Ada contributes first and that Bob decides how much to contribute after observing what Ada contributed. Show this game in extensive form. (Hint: To find the payo?s at each terminal node, first determine whether the project succeeds at each node. If it does not succeed, what is the payo? to each player? If it succeeds at a node, what is the payo? to Ada at that node and what is the payo? to Bob at that node?)B) How many strategies are possible for Ada? How many strategies are possible for Bob?C) Show this game in strategic form.D) Suppose that Ada moves first and makes her contribution. Bob can tell if she gave $3000, but if she gives $1,000 or $2,000, he doesnt know which it is.Show this game in extensive form.E) For the game described in D), how many strategies are possible for Ada? How many strategies are possible for Bob? 4F) Show this game in strategic form.
Tags:
strategies
economics
statistics
Game Theory
User generated content is uploaded by users for the purposes of learning and should be used following FENTYESSAYS.COM ESSAY’s honor code & terms of service.
