what is the present value of $500 recieved at the end of each year for 15 years? ( assume thatt the first patyment is recieved a
1 answer:
You might be interested in
Answer & Explanation:
a. The game tree for this sequential-move game is as follows:
"The image is attached below"
Therefore, if Big Panda climbs the tree the cost for him will be 2kilocalories, thus his payoff will reduce by 2Kc.
Similarly, if Little Panda climbs the tree there will be cost of 0Kc for climbing the tree.
b. When the rollback equilibrium is used, then Little panda will choose not to climb the tree corresponding to Big Panda's strategy for climbing the tree.
That is the payoff will be as:
If BP climbs the tree the payoff cost will be 4Kc, 4Kc
If BP don't climbs the tree the payoff cost will be 9Kc, 1Kc
In this case Big panda will chosoe not to climb the tree.
Therefore the rollback equilibrium will be equal to 9Kc, and 1Kc.
