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Game theory - A Tutorial |
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Dynamic Games: Example 3 |
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The game is shown on the left. The middle figure reduces the bottom part of the tree by choosing the best last move of P1. However, this reduced game is not obvious, so the backward method does not work. |
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The right-part of the figure shows a matrix game equivalent to original game. The moves of P1 are pairs (first move, second move). This matrix game has only one NE: P1 plays (L, L) and P2 plays L. |
