1. Two investors have each deposited 4 (all amounts are in $10,000s) with a bank. The bank has invested these deposits in a long-term project. If both investors make withdrawals at date 1 then each receives 2 and the game ends. If only one investor makes a withdrawal at date 1 then that investor receives 4, the other receives 0, and the game ends. Finally, if neither investor makes a withdrawal at date 1 then the project matures and the investors make withdrawal decisions at date 2. If both investors make withdrawals at date 2 then each receives 8 and the game ends. If only one investor makes a withdrawal at date 2 then that investor receives 10, the other receives 6, and the game ends. Finally, if neither investor makes a withdrawal at date 2 then the bank returns 8 to each investor and the game ends. Find the subgame-perfect outcomes.
1. Two investors have each deposited 4 (all amounts are in $10,000s) with a bank. The bank has invested these deposits in a long-term project. If both investors make withdrawals at date 1 then each receives 2 and the game ends. If only one investor makes a withdrawal at date 1 then that investor receives 4, the other receives 0, and the game ends. Finally, if neither investor makes a withdrawal at date 1 then the project matures and the investors make withdrawal decisions at date 2. If both investors make withdrawals at date 2 then each receives 8 and the game ends. If only one investor makes a withdrawal at date 2 then that investor receives 10, the other receives 6, and the game ends. Finally, if neither investor makes a withdrawal at date 2 then the bank returns 8 to each investor and the game ends. Find the subgame-perfect outcomes.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 13PAE
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