a) What is M's action choice in an SPNE when p

b)What is M's action choice in an SPNE when 500,000

c)What is M's action choice in an SPNE when p>1,500,000

d)Find a SPNE. Specifically determine B's equilibrium proposal p and (in addition to the actions you determined in parts (A) to(c) M's action choice for proposal levels p=500,000 and p=1,500,000.

e) Is there a unique SPNE?Briefly explain.

Consider the following procedure for determining the budget level b of a school district. A school board B proposes a budget level p E [0, +oo). The budget proposal passes if and only if it is approved by a representative voter M. In particular, M observes the budget proposal p and decides whether to approve, A, or reject it R. If M approves then p becomes the new budget level, that is, b = p; if M rejects, then the budget level is set at a status quo level q > 0, that is, b = q. The payoff of the board B and voter M depend only on the budget level decided and, in particular, B's payoff is equal to the budget level decided, b, (thus the board wants as large a budget as possible), while M's payoff is given by-11,000,000-bl (that is M's ideal budget level is 1,000,000 and different levels are disliked according to the absolute value of the difference from that ideal level) Assurne q 500.000 Consider the following procedure for determining the budget level b of a school district. A school board B proposes a budget level p E [0, +oo). The budget proposal passes if and only if it is approved by a representative voter M. In particular, M observes the budget proposal p and decides whether to approve, A, or reject it R. If M approves then p becomes the new budget level, that is, b = p; if M rejects, then the budget level is set at a status quo level q > 0, that is, b = q. The payoff of the board B and voter M depend only on the budget level decided and, in particular, B's payoff is equal to the budget level decided, b, (thus the board wants as large a budget as possible), while M's payoff is given by-11,000,000-bl (that is M's ideal budget level is 1,000,000 and different levels are disliked according to the absolute value of the difference from that ideal level) Assurne q 500.000