The Game-Theoretic Model and Equilibrium Sets

Abstract

We first introduce the game-theoretic model in section 2.1 with four stages. However, since both players make their choices without any knowledge of previous random choices and choices of the other player, the analysis can later be based on the normal form. In section 2.2 we describe the Bayesian Nash equilibrium points of the normal form game in pure strategies. In section 2.3, finally, we apply elimination of weakly dominated strategies as an alternative theoretical solution concept to Bayesian Nash in pure strategies.