1. Think up a real-world or fictional situation that you can describe with either a sequential or simultaneous game. The situation could be based on a real-world business or non-business situation, a fictional example from a movie or book, a non-fictional example from a newspaper story or based on a current event, or something similar. This will take some thinking on your part as you need to come up with something unique.

Note: It should NOT just be a description like "if both pick 'up', player 1 gets $10 and player 2 gets $20" etc. That is, there should be a description of the situation so that it is clear why the actions lead to the different outcomes.For example, see the description of the cake cutting game in part 1 of Problem Set #6 or the description of the prisoner's dilemma in mini-lecture 5.12.

Note:It should not be an example directly taken from the class mini-lectures or from a textbook (including our textbook).

Note:You will probably have to simplify any real-world or fictional example so that each player only has a limited number of possible actions and to limit the number of players. For example, we limited how the first player could cut the cake in the cake cutting game in part 1 of Problem Set #6. If you simplify the game, be clear about what you are doing.

1. Describe the situation that you will model. Make sure it is clear: (i) who the players are; (ii) what possible actions each player can take; and (iii) what the players' preferences are across outcomes.

2. Set up this game as a simultaneous or sequential game and draw the matrix or game tree that represents it. If you assign numbers to the outcomes, make sure the values you assign are consistent with the players' preferences. If you do not, make sure it is clear what the players' preferences are over outcomes.

Note: You can either draw the game tree/matrix by hand and then photograph or scan the tree/matrix and paste it into the assignment or use the drawing/table tool in Word to draw the tree/create the matrix.

3. Find the Nash equilibrium or the sub-game perfect Nash equilibrium to this game. Underline the payoffs in simultaneous games or underline strategies or highlight the game tree path in sequential games to show what the Nash equilibrium is/are.

4. Is/are the sub-game perfect Nash equilibrium efficient?EXPLAIN

**** Description of Cake Cutting Game and subsequent tree

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