[ QUOTE ]
P.48:
<B,call> = p(A has nuts)(-1) + p(A has a bluff)(+5)
<B,call> = (0.2)(-1) + (5)x
Shouldn't it be:
<B,call> = p(A has nuts)(-1) + p(A has a bluff)(+5)
<B,call> = (1-x)(-1) + (5)x
[/ QUOTE ]
There is a problem in the original text. The correct formulation follows from conditioning on the right information set. I previously posted the correction here:
http://forumserver.twoplustwo.com/sh...age=0&vc=1
The authors' general conclusions are unchanged by the correction even though the value function (and graph thereof) becomes non-linear.