ECON/MGEC 333 Game Theory And Strategy Midterm Examination II Solutions with Questions 2007

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. (30pts.) Consider the following game played between a boss (B) and an employee (E). The boss offers a wage, w ≥ 0, and after observing the wage offer the employee decides how much effort, e ≥ 0,... to expend. The payoff functions of the boss and the employee are given as . (30pts.) Consider the following extensive form game, where b is a non-negative number: What are the subgame perfect equilibria of this game if b = 0? For what range of b, the unique subgame perfect equilibrium is ((Out, f), F)? Consider the following Bertrand duopoly model. The demand function for firm i = 1, 2 as a function of the price choices of the two firms, P1 and P2, is given by [Show More]

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