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Questions › GATE › GATE 2024 › Q52
2 marks, −0.667Game Theory › Game theory and strategic behaviour › Extensive-form games and backward inductionModerateabout 2 min

GATE 2024 Question 52: Game theory and strategic behaviour

An incumbent firm (III) faces the possibility of entry by a challenger firm (CCC). If CCC enters, III may either accommodate or fight. If CCC does not enter, its payoff is 1, while III's payoff is 2. If CCC enters, and III accommodates, their payoffs are 2 and 1, respectively. However, if CCC's entry is met with a fight by III, their payoffs are 0 and 1, respectively. Which one of the following is a subgame perfect Nash equilibrium (SPNE) under perfect information?

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An incumbent firm (I) faces the possibility of entry by a challenger firm (C). If C enters, I may either accommodate or fight. If C does not enter, its payoff is 1, while I 's payoff is 2. If C enters, and I accommodates, their payoffs are 2 and 1, respectively. However, if C 's entry is met with a fight by I, their payoffs are 0 and 1, respectively. Which one of the following is a subgame perfect Nash equilibrium (SPNE) under perfect information? (A) enter; accommodate (B) enter; fight (C) not enter; accommodate (D) not enter; fight

Game theory and strategic behaviour has come up 61 times in 6 exams since 2008.

What this question tests

This question is on Extensive-form games and backward induction, part of Game theory and strategic behaviour in Game Theory.

Games played in sequence, solved from the end back to the start.

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