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Consider a game between Congress (C) and the President (P). Congress can either raise the debt ceiling or not . The president can cut spending
Consider a game between Congress (C) and the President (P). Congress can either raise the debt ceiling or not . The president can cut spending or not . The game is as follows: A game tree where Player C moves first with the choice to play RDC or not RDC. If C plays RDC, P has a decision node to play CS or not CS. If P plays not CS, the payoff is 1,4. If P plays CS, the payoff is 3,3. If C plays not RDC, P has a decision to play CS or not CS. If P plays not CS, the payoff is 2, 2. If P plays CS, the payoff is 4,1. What is the Subgame Perfect Nash equilibrium of this game? (5 pts.) Is there a strategic move that the president can make to improve their payoff? Describe the move completely (and whether it is a threat, promise, or commitment) and explain your answers. (10 pts.) Explain why the president committing to cut spending will not be an effective strategic move. (5 pts.)
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