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Question 2. Consider the following strategic situation. Agent 1 has three possible choices: A1 = {5, 6,7} and agent 2 has three possible choices: A2

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Question 2. Consider the following strategic situation. Agent 1 has three possible choices: A1 = {5, 6,7} and agent 2 has three possible choices: A2 = {4,5,6}. Let a, and a2 be representative actions of 1 and 2. Agents payoff functions are: u1 (a1, a2) = a1 (4 + 2 - a1) u2(a1, a2) = a2(4 + a1 - a2) Agent 1 moves first, selecting an action from A1. Then, having observed the choice of 1, agent 2 makes a choice from A2. Draw the extensive form of the game and solve by backward induction

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