Understanding Game Theory: Drake's Decision-Making Scenario
School
Miami University**We aren't endorsed by this school
Course
ECO 201
Subject
Economics
Date
Dec 11, 2024
Pages
1
Uploaded by MinisterFog1247
Drake is a high school student who lives in a tough urban neighborhood. Every day, Drake decides whether he will stay late after school and play basketball with his friends, and then calls his Mom, who decides whether to pick him up from school or ask him to get home another way--either by taking the bus (if he is not staying late) or by walking home (if he is staying late). Drake likes playing basketball, but most of all, he wants his mom to pick him up, and least of all, to walk home after staying late. For Mom, her best outcome is when Drake takes the bus home, but most of all, she does not want him to need to walk home. The game tree for this game is shown below. Question: What are the rollback (backward induction) equilibrium strategies and outcome? Drake O The rollback equilibrium strategies are that Drake will stay late, and Mom will NOT pick him up. The equilibrium outcome is that Drake will get a payoff of 2 and Mom will get a payoff of 1. (O The rollback equilibrium strategies are that Drake will stay late, and Mom will pick him up. The equilibrium outcome is that Drake will get a payoff of 4 and Mom will get a payoff of 3. O The rollback equilibrium strategies are that Drake will NOT stay late, and Mom will NOT pick him up. The equilibrium outcome is that Drake will get a payoff of 1 and Mom will get a payoff of 4. O The rollback equilibrium strategies are that Drake will NOT stay late, and Mom will pick him up. The equilibrium outcome is that Drake will get a payoff of 3 and Mom will get a payoff of 2.
