<p>A) Does player 1 have a dominant strategy, and if so what is it? [NO]
B) Does player 2 have a dominant strategy, and if so what is it? [NO]
C) Determine the Nash Equilibria of this game. [TOP/LEFT]
D) If each player plays their maximin strategy, what payoff will each of them receive? [PLAYER 1 PAYOFF: 3; PLAYER 2 PAYOFF: 1]
E) Now suppose the same game is played with the exception that player 1 moves first and player 2 moves second. Using the backward induction method, what will be the outcome of the game? (Hint: it will be helpful to sketch the game tree.) [TOP/LEFT]</p>
<p>My answers are capitalized after the question. I have been studying for my econ exam with my friend, and we can’t figure out the right answers to these questions.</p>
<p>D) Incorrect. Player 1 payoff is 14. Player 2 payoff is 1.<br>
Maximin means each player maximizes his minimum possible payoff. Minimum payoff for P1 top is 2, minimum payoff for P1 bottom is 3. So P1 chooses bottom. Minimum payoff for P2 left is 0, minimum payoff for P2 right is 1. So P2 chooses right. Therefore the outcome of the game is bottom right, with payoffs of 14 and 1 for P1 and P2 respectively.</p>
<p>E) Incorrect. Bottom right. Just draw the tree and solve it backwards, ie starting with what P2 would choose given each of the possible decisions made by P1.</p>