1-A town council consists of three members who vote every year on their own salary increases. Two Yes votes are needed to pass the increase. Each member would like a higher salary but would like to vote against it herself because that looks good to the voters. Specifically, the payoffs of each are as follows:

Raise passes, own vote is No: 10 Raise fails, own vote is No: 5 Raise passes, own vote is Yes: 4 Raise fails, own vote is Yes: 0

Voting is simultaneous. Write down the three dimensional payoff table and show that in the Nash Equilibrium the raise fails unanimously. Explain how a repeated relationship among the members can secure a salary increases every year if the following 3 conditions are true:

1. Every member serves a 3 year term
2. Every year in rotation one of them is up for reelection, and
3. The townspeople have short memories, remember only the votes on the salary increase motion of the current year and not those of past years.

2-In a scene from the movie Manhattan Murder Mystery, Woody Allen and Diane Keaton are at a hockey game in Madison Square Garden. She is obviously not enjoying herself, but he tells her: "Remember our deal. You stay here with me for the entire hockey game, and next week I will come to the opera with you and stay until the end." Later, we see them coming out of the Met into the deserted Lincoln Center Plaza while inside the music is still playing Keaton is visibly upset: "What about our deal? I stayed to the end of the hockey game, and so you were supposed to stay till the end of the opera." Allen answers, "You know I can't listen to too much Wagner. At the end of the first act, I already felt the urge to invade Poland."

Comment on the strategic Choices made here by using your knowledge of the theory of strategic moves and credibility.