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Pricing_under_Uncertainty.tex
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Pricing_under_Uncertainty.tex
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\begin{figure}[H]
\centering
\begin{tikzpicture}[scale=1.5]
% Initial move
\draw[thick] (0,0) -- (-2.5,-1) node[pos=.5,left,above] {$H$};
\draw[thick] (0,0) -- (2.5,-1) node[pos=.5,right,above] {$L$};
% Firm A's move
\draw[thick] (-2.5,-1) -- (-3.5,-2) node[pos=.4,left=0.1cm] {\color{red}$h$};
\draw[thick] (-2.5,-1) -- (-1.5,-2) node[pos=.4,right=0.1cm] {\color{red}$l$};
\draw[thick] (2.5,-1) -- (1.5,-2) node[pos=.4,left=0.1cm] {\color{red}$h$};
\draw[thick] (2.5,-1) -- (3.5,-2) node[pos=.4,right=0.1cm] {\color{red}$l$};
% Firm B's move
\draw[thick] (-3.5,-2) -- (-4,-3) node[pos=.6,left=0.1cm] {\color{blue}$h$};
\draw[thick] (-3.5,-2) -- (-3,-3) node[pos=.6,right=0.1cm] {\color{blue}$l$};
\draw[thick] (-1.5,-2) -- (-2,-3) node[pos=.6,left=0.1cm] {\color{blue}$h$};
\draw[thick] (-1.5,-2) -- (-1,-3) node[pos=.6,right=0.1cm] {\color{blue}$l$};
\draw[thick] (1.5,-2) -- (1,-3) node[pos=.6,left=0.1cm] {\color{blue}$h$};
\draw[thick] (1.5,-2) -- (2,-3) node[pos=.6,right=0.1cm] {\color{blue}$l$};
\draw[thick] (3.5,-2) -- (3,-3) node[pos=.6,left=0.1cm] {\color{blue}$h$};
\draw[thick] (3.5,-2) -- (4,-3) node[pos=.6,right=0.1cm] {\color{blue}$l$};
% Initial node
\draw[fill=white, thick] (0,0) circle[radius=2pt];
\node[above=0.1cm] at (0,0) {$x_0$};
% Firm labels
\node at (0,-1) {\color{red}Firm $A$};
\node[right] at (4,-2) {\color{blue}Firm $B$};
% Labels for decision nodes
\fill (-2.5,-1) circle (2pt) node[left=0.1cm] {1};
\fill (1.5,-2) circle (2pt) node[left=0.05cm] {5};
\fill (3.5,-2) circle (2pt) node[right=0.05cm] {6};
\fill (2.5,-1) circle (2pt) node[right=0.1cm] {2};
\fill (-3.5,-2) circle (2pt) node[left=0.05cm] {3};
\fill (-1.5,-2) circle (2pt) node[right=0.05cm] {4};
% Terminal nodes
\fill (-4,-3) circle (2pt) node[below=0.1cm] {$a$};
\fill (-3,-3) circle (2pt) node[below=0.1cm] {$b$};
\fill (-2,-3) circle (2pt) node[below=0.1cm] {$c$};
\fill (-1,-3) circle (2pt) node[below=0.1cm] {$d$};
\fill (1,-3) circle (2pt) node[below=0.1cm] {$e$};
\fill (2,-3) circle (2pt) node[below=0.1cm] {$f$};
\fill (3,-3) circle (2pt) node[below=0.1cm] {$g$};
\fill (4,-3) circle (2pt) node[below=0.1cm] {$h$};
% Information sets
\node[rounded rectangle, draw, dashed, inner xsep=4.5cm, inner ysep=0.26cm] at (0,-1) {};
\draw[densely dotted, thick] (-3.2, -2.15) -- (-4,-2.15) -- (-3.7,-1.65) -- (1.5,-1.65) -- (1.8, -2.15) -- (1.1,-2.15) -- (1.1,-1.75) -- (-3.2,-1.75) -- (-3.2, -2.15);
\draw[densely dotted, thick] (-1.8, -1.85) -- (-1.1,-1.85) -- (-1.1,-2.25) -- (3.3,-2.25) -- (3.3,-1.85) -- (4,-1.85) -- (3.7,-2.35) -- (-1.5,-2.35) -- (-1.8, -1.85);
\end{tikzpicture}
\end{figure}