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Consider the following payoff matrix: Suppose that the simultaneous-move stage game represented by this payoff matrix is played two times and that players do not
Consider the following payoff matrix: Suppose that the simultaneous-move stage game represented by this payoff matrix is played two times and that players do not discount future utility (current and future utility are equally valuable). Consider the following strategy prole: 0 Player 1's strategy: Stage 1: B Stage 2: T regardless of what happened in stage 1 a Player 2's strategy: Stage 1: R Stage 2: L regardless of What happened in stage 1 Now consider the following three statements about this strategy prole: (I) In the rst stage, both players have an incentive to deviate unilaterally. (II) Neither player has an incentive to deviate unilaterally in the second stage. (III) This is a SPNE. (a) All of the statements are correct. (b) None of the statements is correct. ((3) Statement (I) is false, but statements (II) and (III) are true. (d) Statement (II) is false, but statements (I) and (III) are true. (e) Statement (III) is false, but statements (I) and (II) are true
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