Question 5 (20 marks) Consider the following game between two competing shops: Shop B Build New Shop 200,200 Remodel Sho

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Question 5 20 Marks Consider The Following Game Between Two Competing Shops Shop B Build New Shop 200 200 Remodel Sho 1 (80.54 KiB) Viewed 31 times

Question 5 (20 marks) Consider the following game between two competing shops: Shop B Build New Shop 200,200 Remodel Shop 400.300 Shop A Build New Shop Remodel Shop beaye Shop As Is 300, 400 150, 400 450, 450 NG 175.300 a) What is a Nash equilibrium? (2 marks) b) Explain what a dominant strategy is. Do either A or B have a dominant strategy? (2 marks) c) Find the pure-strategy Nash equilibrium or equilibria in the above game. (4 marks) d) Suppose the complete game moves sequentially, with Player 1 moving first. Provide the extensive form of the full sequential game, e) Use backward induction to solve for the sub-game perfect Nash equilibrium or (4 marks) Compare the players expected payoffs in (5a) and (54), Strategies. -Donnated Leave Shop As Is 150.400 350.175 300, 350 3x3