Dynamic Games of Complete and Perfect Information Assignment Help

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Dynamic Games of Complete and Perfect Information:

In  this class of games  first. playerl  moves and then  after observing playerl's move, player 2 chooses her  strategy and they  receive their respective payoffs and the game ends there. The grenade game falls under this class, where

i)  player 1 chooses an action a, from a feasible set A1.

ii) player 2  observes al and then chooses an action a2  from  the feasible set A2 Payoffs to  the players are Π1(a1,  a2) and Π2(a1,  a2);
Many  economic situations  fit this kind of framework. One classic example  is "Stackelberg model of duopoly". The key features of a dynamic game of complete and perfect information are

a)  the moves occur in sequence;

b)  all previous moves are observed before the next move is chosen; and

c)  the players' payoffs from each feasible  combination  of  moves are common knowledge.

Theory of Backward Induction
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