Calculate and report the subgame perfect nash equilibrium

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Reference no: EM131247020

This exercise will help you see that subgame perfection does not embody the notion of forward induction presented at the end of this chapter.

(a) Consider the game in Figure 15.5. Calculate and report the subgame perfect Nash equilibrium strategy profiles. Are all of these equilibrium strategy profiles consistent with iterated conditional dominance? If not, comment on the equilibrium belief of player 2 and how it differs from the belief identified in the iterated conditional dominance procedure.

(b) For the game described in Exercise 7, can you find a subgame perfect equilibrium that does not survive the iterated conditional dominance procedure?

Reference no: EM131247020

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