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There are three players, labeled 1,2 and 3. At the start of the game, players 1 and 2 simultaneously choose between playing “A” and “B”. If they both choose “A” then the game ends and the payoffs are (1, 0, 0) (the order of payoffs is: player 1, 2 and 3). If they both choose “B” then the game ends and payoffs are (0, 1, 0). If one player chooses “A” while the other one chooses “B”, then player 3 must guess which player chose “A” (that is, player 3 must choose between “1” and “2”). Player 3 makes his 2 selection knowing only that the game did not end after the first stage. If player 3 guesses correctly, then he and the player who selected “A” each obtains a payoff of 2, and the player who selected “B” gets a payoff of 0. If player 3 guesses incorrectly, then everybody gets a payoff of 0. Draw the extensive form of this game.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M91705862

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