V102, Spring 2022 Instructor: Zheng Huang 2.2 Player 1 and Player 2 are playing a game in which Player 1 has the first move at A in the decision tree shown below. Once Player 1 has chosen either Left or Right, Player 2, who can see what Player 1 has chosen, must choose Left or Right at B or C. Both players know the payoffs at the end of each branch. a. What is the equilibrium outcome of this game? (What strategy will Player 1 choose? What strategy will Player 2 choose? Explain.) (7 points) b. Suppose Player 1 and Player 2 enter into a binding agreement in which Player 1 agrees to pay Player 2 a fixed amount of money to get Player 2 to play Left when it is Player 2's turn. How much will Player 1 have to pay Player 2 to get Player 2 to play Left? (3 points) Player 2 chooses Left $20 for player 1 B $15 for player 2 Left $15 for player 1 Right Player 1 A $38 for player 2 chooses Left $10 for player 1 Right $18 for player 2 C Player 2 Right $10 for player 1 chooses $40 for player 2