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1. (45 points) Consider the following game between two players, One and Two (the first number is always One's payoff, the second number is Two's).
1. (45 points) Consider the following game between two players, One and Two (the first number is always One's payoff, the second number is Two's). Restrict attention to pure strategies throughout. Two a One h One C D R 0, 5 3,3 Two 1, 2 5, 1 2, 4 4, 0 (a) (15 points) Find the Subgame Perfect Nash Equilibria (SPNE). (b) (15 points) Find the Nash Equilibria (NE).(c) (10 points) Which of the equilibria you found in (a) and (b) feature non-credible promises? What are these promises and why are they non-credible? (d) (5 points) Is it possible to change the information sets in this game in such a way that none of the equilibria (NE or SPNE) will feature non-credible promises? Show how or explain why not
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