Set up this game as simultaneous-move game-find equilibrium

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Reference no: EM13831833

Consider a game between a parent and a child. The child can choose to be good (G) or bad (B); the parent can punish the child (P) or not (N).

The child gets enjoyment worth a 1 from bad behavior, but hurt worth -2 from punishment. Thus a child who behaves well and is not punished gets a O; one who behaves badly and is punished gets 1 - 2 = - 1;and so on.

The parent gets - 2 from the child's bad behavior and - 1 from inflicting punishment.

(a) Set up this game as a simultaneous-move game, and find the equilibrium.

(b) Next, suppose that the child chooses G or B first and that the parent chooses its P or N after having observed the child's action. Draw the game tree and find the subgame-perfect equilibrium.

For example, the threat "P if B" ("If you behave badly, I will punish you"). How many such strategies does the parent have? Write the table for this game. Find all pure-strategy Nash equilibria.

Reference no: EM13831833

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