During the adoption of a new technology a CEO (player 1) can design a new task for a division manager.

The new task can be either high level (H) or low level (L). The manager (player 2) simultaneously chooses to invest in good training (G) or bad training (B). The payoffs from this interaction are given

by the following matrix:

(a) Present the game in extensive form (a game tree) and solve for all the Nash equilibria.

(b) Now assume that before the game is played the CEO can choose not to adopt this new technology,

in which case the payoffs are (1, 1), or to adopt it, in which case the game is played. Present the

entire game in extensive form. Solve for all the Nash equilibria and subgame-perfect equilibria of

the game.

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