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Learning Goal: I’m working on a economics writing question and need an explanation and answer to help me learn.2. Ada and Bob each have an opportunity to contribute money to an investment project. Ada can either contribute either $1,000, $2,000, or $3,000.
Bob can contribute either $1,000 or $2,000. If the sum of Ada’s and Bob’s
contributions is $3,000 or higher, the project will succeed and it will provide
benefits worth $2500 to each of them. If the sum of their contributions is
less than $3,000, their contributions are returned to them and the project is
not undertaken. A) Suppose that Ada contributes first and that Bob decides how much to
contribute after observing what Ada contributed. Show this game in extensive form. (Hint: To find the payo↵s at each terminal node, first determine
whether the project succeeds at each node. If it does not succeed, what is the
payo↵ to each player? If it succeeds at a node, what is the payo↵ to Ada at
that node and what is the payo↵ to Bob at that node?) B) How many strategies are possible for Ada? How many strategies
are possible for Bob? C) Show this game in strategic form. D) Suppose that Ada moves first and makes her contribution. Bob can
tell if she gave $3000, but if she gives $1,000 or $2,000, he doesn’t know
which it is.Show this game in extensive form. E) For the game described in
D), how many strategies are possible for Ada? How many strategies
are possible for Bob?
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F) Show this game in strategic form.
Requirements: 100   |   .doc file

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