Question 1 (1 point)

Consider the following game. There are two players, 1 and 2. Player 1 moves first and can choose either A or B. Player 2 observed what Player 1 has done and then chooses either C or D.

If Player 1 chooses A and Player 2 chooses C, Player 1 receives a payoff of 2 and Player 2 receives a payoff of 1.

If Player 1 chooses A and Player 2 chooses D, Player 1 receives a payoff of 1 and Player 2 receives a payoff of 2.

If Player 1 chooses B and Player 2 chooses C, Player 1 receives a payoff of 10 and Player 2 receives a payoff of 10.

If Player 1 chooses B and Player 2 chooses D, Player 1 receives a payoff of 0 and Player 2 receives a payoff of 11.

What is the most likely outcome of this game?

Question 1 options:

	Player 1 chooses A and Player 2 chooses C
	Player 1 chooses A and Player 2 chooses D
	Player 1 chooses B and Player 2 chooses C
	Player 1 chooses B and Player 2 chooses D

Question 2 (1 point)

Refer to question #1. What is the subgame perfect equilibrium of the game?

Question 2 options:

	Player1 chooses A, Player 2 chooses C if 1 chose A, and C if 1 chose B
	Player1 chooses A, Player 2 chooses D if 1 chose A, and D if 1 chose B
	Player1 chooses B, Player 2 chooses C if 1 chose A, and C if 1 chose B
	Player1 chooses B, Player 2 chooses C if 1 chose A, and D if 1 chose B

Question 3 (1 point)

Which of the following is NOT an assumption of subgame perfect equilibrium?

Question 3 options:

	Each player tries to maximize the total earnings of both players
	Each player reasons backwards through the stages of the game
	Each player assumes that other players are rational
	Each player tries to maximize her own earnings.

Question 4 (1 point)

Why is it that subgame perfect equilibrium predicts poorly in many games?

Question 4 options:

	It requires people to reason backwards, which is unnatural for people
	People's utility function may take into account other people's payoffs
	People do not believe that other players use rational logic
	All of the above

Question 5 (1 point)

Consider the following game. There are two players, 1 and 2. Player 1 moves first and can choose either A or B. Player 2 observed what Player 1 has done and then chooses either C or D.

If Player 1 chooses A and Player 2 chooses C, Player 1 receives a payoff of 2 and Player 2 receives a payoff of 2.

If Player 1 chooses A and Player 2 chooses D, Player 1 receives a payoff of 2 and Player 2 receives a payoff of 1.

If Player 1 chooses B and Player 2 chooses C, Player 1 receives a payoff of 1 and Player 2 receives a payoff of 1.

If Player 1 chooses B and Player 2 chooses D, Player 1 receives a payoff of 0 and Player 2 receives a payoff of 0.

What is the most likely outcome of this game in an experiment?

Question 5 options:

	A, C
	A, D
	B, C
	B,D

Question 6 (1 point)

Please refer to question 5. What is the subgame perfect equilibrium to the game?

Question 6 options:

	Player 1 plays A, player 2 plays C if 1 plays A and plays C if 1 plays B
	Player 1 plays A, player 2 plays C if 1 plays A and plays D if 1 plays B
	Player 1 plays B, player 2 plays D if 1 plays A and plays C if 1 plays B
	Player 1 plays B, player 2 plays D if 1 plays A and plays D if 1 plays B

Question 7 (1 point)

In experiments with the centipede game

Question 7 options:

	Most pairs play the subgame perfect equilibrium
	About one half of pairs play the subgame perfect equilibrium
	Few pairs play the subgame perfect equilibrium
	There is no subgame perfect equilibrium for people to play