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Draw the extensive-form diagram for the following strategic setting. There are three people: Amy, Bart, and Chris. Amy and Bart each have two cards, one of which has “K” (for King) written on it and the other has “Q” (for Queen) written on it; that is, Amy and Bart both have a King and a Queen. At the beginning of the game, Amy must place one of her cards (either K or Q) into an envelope and then give the envelope to Bart. Bart sees the card that Amy placed into the envelope, and then he places one of his cards (either K or Q) into the envelope as well. The envelope is then given to Chris, who has not observed the moves of Amy and Bart. Chris opens the envelope. 1 Chris sees the two cards inside, but she does not know which card was placed there by Amy and which card was deposited by Bart. After observing the contents of the envelope, Chris selects “yes” (Y) or “no” (N). If Chris selects Y and Amy had put a King in the envelope, then Amy and Bart each get a payoff of 0 and Chris gets 1. If Chris selects N and Amy had put a Queen in the envelope, then, again, Amy and Bart each get a payoff of 0 and Chris gets 1. In all other outcomes, Amy and Bart each get a payoff of 1 and Chris gets 0.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M91707248

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