Sequential Games
The early bird gets the worm, but the early worm gets eaten.—Proverb
Now we will look at games similar to the ones discussed already, but change the important assumption that the players move simultaneously. We will be looking to predict how players should make choices, and the key is to anticipate the other player’s reaction. We will discuss what the outcome will be, and whether it is better to go first, go second, or whether it does not matter.
5.1 Backward Induction and “Subgame Perfect” Equilibria
Let us first turn our attention to the Dating Game from Table 3.4. Here we are going to allow Bob to go first, and then, after seeing Bob’s choice, Suzy will make her decision. What will happen? ...
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