Parallels with Simple regression Bo is still the intercept B, to Bk all called slope parameters u is still the error term(or disturbance) Still need to make a zero conditional mean assumption, so now assume that E(lx,x2…,x)=0 Still minimizing the sum of squared residuals. so have k+l first order conditions Economics 20- Prof anderson
Thus, to find Nash equilibria in IN=N, A(Si)), uin, we use the conditions: for ach player i (1)he is indifferent among all strategies in St,and (2)any strategy in St is at least as good as any strategy in S Example 3.7.(Meeting in an Airport ). Mr Wang and Ms Yang are to meet in an irport. However, they do not know whether they are to meet at door a or door B. The payoffs are specified in the following