Reference no: EM13999104
Two investors have each deposited $100 million in a bank. The bank has invested these deposits in a long-term project. If the bank is forced to liquidate the investment before the project matures, a total of $160 million can be recovered. On the other hand, if the bank allows the investment to reach maturity, the project will pay out a total of $300 million.
There are two dates at which the investors can make withdrawals from the bank: date 1, before the bank’s investment matures, and date 2, after its maturity. If both investors make withdrawals at date 1 then each receives $80 and the game ends. If only one investor makes a withdrawal at date 1 then that investor receives $100, the other receives $60, and the game ends. If neither investor makes a withdrawal at date 1 then the project matures and the investors make withdrawal decisions at date 2. If both investors make withdrawals at date 2 then each receives $150. If only one investor makes a withdrawal at date 2 then that investor receives $200 and the other receives $100. Finally, if neither investor makes a withdrawal at date 2 then the bank returns $150 to each investor. At each date the decision whether or not to make a withdrawal is made simultaneously by both investors. Each investor is selfish and greedy, that is, cares only about his own wealth and prefers more money to less.
(a) Represent this game in extensive form.
(b) How many proper sub games are there?
(c) Find the pure-strategy sub game-perfect equilibria.
(d) Convert the original extensive-form game (of part a) into a strategic-form game.
(e) Find all the pure-strategy Nash equilibria of the game of part (d).
(f) Are all the pure-strategy Nash equilibria sub game perfect?
|
The shape of the long-run supply curve
: If input prices had increased as firms entered the lithium industry in response to rising demand, what would have been the shape of the long-run supply curve? If the market demand for lithium were to decrease during the 2020s, what would happen to th..
|
|
Who purchase hybrid and all-electric passenger vehicles
: Other things being equal, what will happen to automakers' profits if they are able to sell more vehicles using battery packs and thereby scale up battery production? Why do you suppose that some automakers support the payment of government subsidies ..
|
|
Bundle correspond to kink of consumer budget constraint
: A consumer may consume food x and hours of leisure time h. The price of one unit of food is $1. Initially, the consumer has no money and 24 hours of spare time that she may devote either to work, or to leisure. The consumer earns wage rate s per hour..
|
|
Show that magnetic field b obeys travelling wave equation
: Starting with the following equations that describe the electric and magnetic fields for a region of space with no charge or current. Show that the magnetic field B obeys the travelling wave equation.
|
|
Find the pure-strategy sub game-perfect equilibria
: Two investors have each deposited $100 million in a bank. The bank has invested these deposits in a long-term project. If the bank is forced to liquidate the investment before the project matures, a total of $160 million can be recovered. How many pr..
|
|
Current situation and the change to two-child policy
: What product would you suggest that an American company introduce into China based on the current situation and the change to a “two-child” policy and discuss the target customer and segment and the 4P’s for the product you selected
|
|
What is your total cost per acre
: Assume your fixed cost is $250/acre, the variable cost per bushel is $1.22, and you produce 65 bushels/acre? What is your total variable cost per acre? What is your total cost per acre?
|
|
What is loss of consumer surplus associated with bridge toll
: Suppose you are in charge of a toll bridge that costs essentially nothing to operate. The demand for bridge crossings Q is given by P= 15 - 0.5Q. How many people would cross the bridge if there were no toll? What is the loss of consumer surplus assoc..
|
|
Physical and cognitive milestones that occurs in adolescent
: Discuss the physical and cognitive milestones that occurs in adolescent. Why can't we enteract with adolescence in the same way as adults
|