1. The Investment Game is a game with two players, a Principle (P) and an Agent (A). The Principle is given an amount of money, say $100, which she can keep for herself or invest. Suppose the Principle invests I and keeps 100-I. I can be any integer numbers between 0 and 10. Any invested amount is doubled and is transferred to the Agent. That is, the Agent receives 2I. The Agent then decides how much of the 2I to return to the Principle. Suppose the Agent keeps K and returns 2I-K. K can be any integer numbers between 0 and 10. The final payoffs in the game are then K for the Agent and 100-I+2I-K for the Principle.

1. Write the extensive form of the game. (5 points) (You may choose to draw it on a piece of paper, scan/photo it and then submit online)

2. Assuming both the Principle and the Agent are only concerned with maximizing their own private monetary reward, what are the predictions of the two players decisions? (5 points)