Tracy and Amy are playing a game in which Tracy has the first move at X in the decision tree shown below. Once Tracy has chosen either the top or bottom branch at X, Amy, who can see what Tracy has chosen, must choose the top or bottom branch at Y or Z. Both players know the payoffs at the end of each branch. In the equilibrium this game, Tracy chooses the ________ branch, and then Amy chooses the ________ branch.
A)top; top
B)top; bottom
C)bottom; top
D)bottom; bottom

Question

Tracy and Amy are playing a game in which Tracy has the first move at X in the decision tree shown below. Once Tracy has chosen either the top or bottom branch at X, Amy, who can see what Tracy has chosen, must choose the top or bottom branch at Y or Z. Both players know the payoffs at the end of each branch.  In the equilibrium this game, Tracy chooses the ________ branch, and then Amy chooses the ________ branch.
A)top; top 
B)top; bottom 
C)bottom; top 
D)bottom; bottom

Quizplus · Accepted Answer

Tracy knows that Amy will always choose the top branch, so if Tracy chooses the top branch she will earn 25, and if she chooses the bottom branch she will earn 75. So Tracy will choose the bottom branch, and then Amy will choose the bottom branch.

Tracy and Amy Are Playing a Game in Which Tracy