Consider the following sequential-move game:This game involves three players, each making sequential decisions. The game proceeds asfollows:• Player 1 initiates the game by choosing between two actions: Left and Right.• Depending on Player 1's choice, Player 2 then decides, choosing between two actions,left (I) and right (`r`).• Finally, Player 3 makes the last move in the sequence, choosing between actions `a` and`b`.The payoffs are determined by the sequence of choices made by all three players. Eachpayoff is represented by the triplet (x,y,z), where x, y, and z denote the payoffs for Player 1,Player 2, and Player 3, respectively. For example, if Player 1 chooses 'Left', Player 2 chooses'I', and Player 3 chooses `a` the resulting payoff would be (3,1,2). This indicates that Player1 receives a payoff of $3, Player 2 receives a payoff of $1, and Player 3 receives a payoff of$2 for this particular sequence of actions.LeftPlayer 2Player 1RightPlayer 2Player 3Player 3Player 3Player 33,1,27,4,1 0,3,97,3,1 5,6,70,0,1 1,6,40,4,8Find the backward-induction equilibrium of this game.

Nash equilibrium, named after the mathematician and economist John Nash, is a concept in game theory…

This game involves three players, each making sequential decisions. The game proceeds as follows: Player 1 initiates the game by choosing between two actions: Left and Right. • Depending on Player 1's choice, Player 2 then decides, choosing between two actions, left (I) and right (`r`). Finally, Player 3 makes the last move in the sequence, choosing between actions `a` and 'b'.

This game involves three players, each making sequential decisions. The game proceeds as follows: Player 1 initiates the game by choosing between two actions: Left and Right. • Depending on Player 1's choice, Player 2 then decides, choosing between two actions, left (I) and right (`r`). Finally, Player 3 makes the last move in the sequence, choosing between actions `a` and 'b'.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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