Assignment: Analysis of strategic behavior in the centipede game

This is a 1200 words essay format Micro Economics project. References (Chicago reference style) must be included to support finding of your research. Only freelancer with extensive knowledge on subject are to bid. Deadline will be on 22 July 2015 12p.m (GMT+8) Assignment: Analysis of strategic behavior in the centipede game”. For the purposes of this essay, the centipede game is described as follows: The centipede game is A famous finite game of perfect information. In this game two players move sequentially one after another. At the beginning of the game, player 1 can either terminate the game immediately (in which case both players receive a small payoff of 1) or pass the move to player 2. Player 2 can then either terminate the game (in which case player 1 receives nothing and player 2 receives a payoff of 2) or pass the move back to player 1. Player 1 can then either terminate the game (in which case both players receive a payoff of 2) or pass the move back to player 2. The game CONTINUES in this fashion for many rounds with payoffs gradually increasing. If the last round is reached, player 2 must decide between option R where both players receive a payoff of 100 and option D where player 1 receives a payoff of 98 and player 2 receives a payoff of 101. A good research essay should address the following points : a) Describe a unique sub game perfect Nash equilibrium of the centipede game ; b) Discuss why such Nash equilibrium appears counter intuitive c) Using your practical understanding of game theory and strategic thinking describe the most reasonable PREDICTION for the game Using your theoretical understanding of game theory and strategic thinking, discuss how such most reasonable PREDICTION can be rationalized/explained; DO NOT forget that both players behave strategically in the game.