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Imagine two people are playing tennis. The server chooses a side to serve to (forehand or backhand) and the receiver chooses a side to expect a serve. If the server chooses forehand and the receiver expects it, the receiver wins 60% of the time, but if the receiver expects backhand, the receiver only wins 20%. If the server chooses backhand, and the receiver expects backhand, the receiver wins 30%, but if the receiver doesn't expect it, the receiver only wins 10%.

  • Show the payoff matrix implied by these probabilities.
  • Calculate the probability that the server should use to make the receiver have no benefit from guessing either side.
  • What is the probability of the server winning with this strategy?

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M91775488
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