1. Explain a sequential game facing your firm, and represent it in extensive or tree form. Calculate and analyze equilibrium of the game. What advice can you deduce from the analysis? Calculate the profit consequences of the advice.
2. Explain repeated bargaining game your firm faces, calculate and analyze equilibrium of the game, and explicitly show how it differs from one-shot (nonrepeated) equilibrium. What advice can you deduce from your analysis? Calculate the profit consequences of the advice.
3. You want to invest in a hot stand near ballpark. You have a .35 probability that you can turn your current $15,000 into $50,000 and a .65 probability that fierce competition will deduce you to ruin, losing all your money. If you decide not to enter, you keep your $15,000. Would you enter market, why or why not?