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This is on Game Theory (llpts) Suppose that players 1 and 2 play the sequential game in Figure : Beginning with player 1, and taking

This is on Game Theory

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(llpts) Suppose that players 1 and 2 play the sequential game in Figure : Beginning with player 1, and taking turns, players can take the action (I or 7'. The rst number in the parentheses corresponds to the payoff of player 1. What is the subgame perfect equilibrium of this game? For the subgame perfect equilibrium to be a correct prediction of this game, what assumptions do you need to make about the rationality of each player and their beliefs? {I'szg 1| 2, I (0

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