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1) Consider the following extensive form game of coordination. Firms 1 and 2 must choose between technologies A and B. Firm 1 prefers technology A
1) Consider the following extensive form game of coordination. Firms 1 and 2 must choose between technologies A and B. Firm 1 prefers technology A while firm 2 prefers technology B, but the firms obtain value from coordination. The following extensive form represents the game: A1 2,1 Firm 2 A Firm 1 B1 0,0 A2 -0,0 B Firm 2 B2 1,3 Note that this game is not simultaneous. a) Find all the pure strategy Nash equilibria of this game b) Which outcomes satisfy the criterion of backward induction? c) Before Firm 2 makes its move, it sees a press release from firm 1 saying that it believes that the industry will converge to technology A. Would such a statement change the outcome of the game
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