1. Describe the situation that you will model. Make sure it is clear: (i) who the players are; (ii) what possible actions each player can take; and (iii) what the players' preferences are across outcomes.

2. Set up this game as a simultaneous or sequential game and draw the matrix or game tree that represents it. If you assign numbers to the outcomes, make sure the values you assign are consistent with the players' preferences. If you do not, make sure it is clear what the players' preferences are over outcomes.

3.) Find the Nash equilibrium or the sub-game perfect Nash equilibrium to this game. Underline the payoffs in simultaneous games or underline strategies or highlight the game tree path in sequential games to show what the Nash equilibrium is/is.

4. Is/are the sub-game perfect Nash equilibrium efficient? EXPLAIN.