Question 1 1 pts Karen can choose to open her restaurant on George (G) or on Pitt (P). Karen's choice is observed by Jess, who can then choose to set up her establishment on either G or P. The payoffs following (G, G) are (100, 80) to Karen and Jess, respectively. If the actions are (G, P), the payoffs are (80, 70). If the actions taken by the two restauranteurs are P followed by G, the payoffs are (80, 60). Finally, if the actions are (P, P) the payoffs are (100, 80). In the credible (subgame perfect) equilibrium, Karen and Jess set up their establishments on the following streets: Q G then G O G then P O P then G O P then P or G then G O P then G or G then P. Question 2 1 pts Consider an entry game in a particular market. NW Coffee decides whether to Enter or Not Enter a market. If NW Coffee chooses Not Enter it gets a payoff of 10 and Dunkin' Donuts (DDs) gets a payoff of 30. If NW Coffee enters, DDs can choose to either Punish or to Cooperate. If DDs chooses Punish following Enter, the payoffs are 5 to NW Coffee and 10 to DDs. If DDs chooses to Cooperate following Enter, NW Coffee gets a payoff of 20 and DDs gets 20. What are the subgame (credible) equilibria? 0 (Enter, Punish} and (Not Enter, Cooperate). 0 (Enter, Cooperate). 0 (Not Enter, Punish) O (Not Enter, Punish) and (Enter, Cooperate). Q There is no subgame equilibrium

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