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. The equilibrium to the game results in ________ for Amy and Tracy relative to what they could get if they could solve their ________.
A)lower payoffs; prisoner's dilemma
B)higher payoffs; commitment problem
C)lower payoffs; credible threat
D)lower payoffs; commitment problem

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.  The equilibrium to the game results in ________ for Amy and Tracy relative to what they could get if they could solve their ________.
A)lower payoffs; prisoner's dilemma 
B)higher payoffs; commitment problem 
C)lower payoffs; credible threat 
D)lower payoffs; commitment problem

Quizplus · Accepted Answer

In the equilibrium of this game, Amy gets 150 and Tracy gets 75. If Amy could commit to choosing the bottom branch, Amy would get 200 and Tracy would get 300.

Tracy and Amy Are Playing a Game in Which Tracy