Adam made a remark that hurt Eve's feelings and they are both kind of mad. Adam is thinking about whether to apologize. If he does not, they will remain annoyed with each other and they will each receive a pay-off of zero. If Adam does apologize, Eve will then choose whether to be gracious and acknowledge that she was perhaps overly sensitive, or to be condescending and lecture Adam about how he should behave in the future. Eve would very much enjoy giving Adam the condescending lecture, but if she does, there is some probability (p) that their relationship will permanently end. If Adam apologizes and Eve accepts graciously, both receive pay-offs of 3. If the relationship ends, both receive pay-offs of -3. If Adam apologizes and Eve gives him a lecture (but their relationship doesn't end), Adam's pay-off is -2 and Eve's is 5.

For what values of p does Adam apologize?

1/2 p 1

0 p 1

1/4 p 1

None of the above.

0 p 5/8

0 p 1/2

Suppose p = 1/3. What is the probability that Eve's equilibrium choice would be a mistake ex post?

1/3

2/3

0

1/4

None of the above.