Questions 13-16 Javier (J) and Penélope (P) are planning a romantic vacation but
ID: 1255452 • Letter: Q
Question
Questions 13-16 Javier (J) and Penélope (P) are planning a romantic vacation but cannot decide where to go. To figure it out they have agreed to choose sequentially. The order of choices and who makes them is captured in the following decision tree, where for each terminal node THE FIRST NUMBER IS THE PAYOFF TO PENÉLOPE AND THE SECOND NUMBER THE PAYOFF TO JAVIER.
Question 13. Suppose that both Javier and Penelope "look forward and reason back", where will they go?
They will stay in LA
They will go to Spain
They will go to France
They will go to Porto
They will go to O Algarve.
Question 14 Suppose that they eliminate the option of going to Porto (so Javier can only choose to go to Algarve if they reach that decision node). If. both Javier and Penelope "look forward and reason back", where will they go?
They will stay in LA
They will go to Spain
They will go to France
They will go to Porto
They will go to O Algarve.
Question 15 . Suppose that they eliminate the option of going to France (so Penelope can only choose to go to Portugal if they reach that decision node). If. both Javier and Penelope "look forward and reason back", where will they go?
They will stay in LA
They will go to Spain
They will go to France
They will go to Porto
They will go to O Algarve.
Question 16 . Suppose now that for each terminal node THE FIRST NUMBER IS THE PAYOFF TO JAVIER AND THE SECOND NUMBER THE PAYOFF TO PENELOPE. If. both Javier and Penelope "look forward and reason back", where will they go?
They will stay in LA
They will go to Spain
They will go to France
They will go to Porto
They will go to O Algarve.
Also anyone knows how to do this problem in an easy way, pls help me?
Explanation / Answer
Q 13. They will go to porto. In this case we use backward induction and compare payoffs starting from the end of the tree. Q 14 In this case they will go to Spain. Again using backward induction we see J would like to go to Porto but since he cannot the outcome ends up in Spain. Q 15. In this case they will stay in LA. Again we use backward induction and compare payoffs in the decision tree. Hope this helps
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