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(N, H?) is not reasonable. It requires that Mr. Entrant believe that Mr. Incumbent will choose HF if he enters. even though this option leads
(N, H?) is not reasonable. It requires that Mr. Entrant believe that Mr. Incumbent will choose HF if he enters. even though this option leads to lower payoffs. (b) New, represent this game in a game tree. Solve for me Nash equilbria of the game by backward induction. These are the subgame perfect equilibria of the game1 i.e. equilibria in which players' actions are optimal in every subgame. Notice I: N, W\") is not a subgame perfect equilibrium because backward induction ensures that actions taken in equilibrium are optimal in every subgame. even those that aren't reached in equilibrium. Suppose that with probability . Mr. Entrant makes a mistake and selects E when he intends to play N (with probability 1 . N is played as intended). Show that for all 3} 0'. (N, W) is not an equilibrium
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