1. 20 Points: Consider the Zeus and Athena corporation competition as exhibited in the
diagram below.
Athena
Low
(16,8)
Low
Zeus
High
(8,16)
Small Market
Low
(20,4)
High
p=1/2
Athena
High
(16,8)
Chance
p=1/2
(b) What are the possible strategies of Zeus?
Athena
Low
(30,10)
Large Market
(c) What are the possible strategies of Athena?
Low
High
(28,12)
Zeus
Low
(16,24)
High
Athena
High
Suppose that Zeus moves first and performs a market survey. Athena does not do a survey,
but knows of the existence of Zeus's survey, but not the results.
(a) Graphically illustrate the information sets using the diagram above.0)
(24,16)
(d) Explain how the game would change if Athena were not aware of Zeus's survey. You
must include information about the changed expected payoffs.