Question

Consider the following game. Player 1’s payoffs are listed first, in bold:                        Player 2 X...

Consider the following game. Player 1’s payoffs are listed first, in bold:

                       Player 2

X

Y

Player 1

U

100 , 6

  800 , 4

M

0 , 0

200 , 1

D

10 , 20

20 , 20
  1. Imagine that Player 1 makes a decision first and Player 2 makes a decision after observing Player 1’s choice. Write down every subgame-perfect Nash equilibrium of this game.
  2. Does the outcome above differ from the Nash equilibrium (if the game were played simultaneously)? Carefully explain why, intuitively, the result differs or does not differ.
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