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4. In the two-period reputation game, the payoffs are Di = 1, P1 = 0, M1 = 2.5, D2 = 1 and P2 = -1.

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4. In the two-period reputation game, the payoffs are Di = 1, P1 = 0, M1 = 2.5, D2 = 1 and P2 = -1. The initial belief of player 2 that player 1 is crazy is pc = 0.2. Player 1 accommodates in period 1. What will player 2 do in period 2? a) Stay with probability 1 b) Exit with probability 1 c) Stay with probability d) Stay with probability ? e) Stay with probability

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