Question
Consider the following game. Player 1 has two possible actions: Clean (C) and Wait (W). After player 1 has moved, player 2 observes the action
Consider the following game. Player 1 has two possible actions: Clean (C) and Wait (W). After player 1 has moved, player 2 observes the action and chooses between Entertain guests (E) and Smash a piata (S). The payoffs are:
- (-2,3) after C,E
- (-5,2) after C,S
- (-3,-4) after W,E
- (2,1) after W,S
a) Draw the extensive form (game tree) and find the subgame-perfect equilibria.
b) Show the normal form and find the pure-strategy Nash equilibria.
c) Suppose instead that player 2 moves first, and player 1 moves after seeing player 2's action. Do you expect the same outcome as in part a? Explain
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