Company A has been requested by its competitor (company B) to stop engaging in aggressive discounting.A can agree or refuse to meet this request. If A agrees then A and the B both get a payoff of $1m.If the A refuses, B has a choice of whether to retaliate or not.When B does not retaliate, A is better off receiving a payoff of $2m, but B is worse off and loses all market share getting $0m.If B retaliates then both A and B are worse off incurring losses of $1m each.

a) Capture this committment game in a sequential tree