Question #67052

Suppose that player 1 moves first by choosing either A or N. Players 2 observe
player 1’s action and then choose I or, O. For every action combination, the
4
player’s pay-offs are the same as in the above pay-off matrix. Draw a tree of this
new game. How many strategies does player 1 have and what are they? Find all the
sub-game perfect equilibria of this game.

Expert's answer

Suppose that player 1 moves first by choosing either A or N. Players 2 observe

player 1’s action and then choose I or, O.

A tree of this new game is:

A -> Player 2 chooses I

Player 1 /

\ N -> Player 2 chooses O

Player 2 has 2 strategies either to choose I or to choose O, and his choice depends on the choice of player 1.

player 1’s action and then choose I or, O.

A tree of this new game is:

A -> Player 2 chooses I

Player 1 /

\ N -> Player 2 chooses O

Player 2 has 2 strategies either to choose I or to choose O, and his choice depends on the choice of player 1.

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