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Consider the following two-player game. First, player 1 selects a number x 0. Player 2 observes x. Then, simultaneously and independently, player 1 selects a
Consider the following two-player game. First, player 1 selects a number x 0. Player 2 observes x. Then, simultaneously and independently, player 1 selects a number y1 and player 2 selects a number y2, at which point the game ends.
Player 1's payoff is: u1(x, y1) = 3y12 + 6y1y2 8xy2.
Player 2's payoff is: u2(y2) = 3y2 + 6y1y2 6y22 + 12xy2.
Draw the game tree of this game and identify its Subgame Perfect Nash Equilibrium.
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