Order the answer to: 4. Dengoso is peaceful and does not like to engage in fights. On the contrary, Azeiteiro would like

Academic Help economy Order the answer to: 4. Dengoso is peaceful and does not like to engage in fights. On the contrary, Azeiteiro would like

economy

Order the answer to: 4. Dengoso is peaceful and does not like to engage in fights. On the contrary, Azeiteiro would like

Question 4. Dengoso is peaceful and does not like to engage in fights. On the contrary, Azeiteiro would like to challenge Dengoso to a duel if he is weak. Azeiteiro does not know the strength of Dengoso, but considers that the observation of the choice of the Dengoso's breakfast gives him information about its strength. Dengoso can choose Milk, which is his preference if he is weak, or Beer, his preference if he is strong, Players' payoffs are presented in the extensive representation of the game shown below, depending on the choice of breakfast and the existence of a fight. Nature attributes 0.1 to the probability of Dengoso being weak. (0,2) Fight (2.2) Fight Weak Beer 9 Milk i No (4,0) (6.0) No i 0.1 Azefero Azeiteiro 6 Nature 0.9 Fight (2,-2) (0-2) Fight Beer 1-9 No Milk (60) Strong (4.0) No Ip Payoffs: (Dengoso, Azeiteiro) a) Prove that [(Milk, Milk),(N, L), p = 0.1; 92 %) and [(Beer, Beer), (L, N), p 2 %; 9 = 0,1] are equilibria of the game. b) Do you detect any problems with one of the previous equilibria? Why?
Subject economy
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