Lee and Cody are playing a game in which Lee has the first move at A in the decision tree shown below. Once Lee has chosen either aggression or cooperation, Cody, who can see what Lee has chosen, must choose either aggression or cooperation at B or C. Both players know the payoffs at the end of each branch. Suppose Lee and Cody enter into a binding non-aggression agreement. As part of that agreement, they negotiate a fine that Cody would have to pay to Lee if Cody chooses aggression after Lee chooses cooperation. For the fine to be effective, it would have to be:
A)less than 15.
B)at least 15.
C)equal to 40.
D)equal to 25.

Question

Lee and Cody are playing a game in which Lee has the first move at A in the decision tree shown below. Once Lee has chosen either aggression or cooperation, Cody, who can see what Lee has chosen, must choose either aggression or cooperation at B or C. Both players know the payoffs at the end of each branch.  Suppose Lee and Cody enter into a binding non-aggression agreement. As part of that agreement, they negotiate a fine that Cody would have to pay to Lee if Cody chooses aggression after Lee chooses cooperation. For the fine to be effective, it would have to be:
A)less than 15. 
B)at least 15. 
C)equal to 40. 
D)equal to 25.

Quizplus · Accepted Answer

If Lee chooses cooperation, then Cody would earn 40 choosing aggression and 25 by choosing cooperation. So in order for it to be in Cody's best interest to choose cooperation, there would have to be a fine of at least 15 for choosing aggression.

Lee and Cody Are Playing a Game in Which Lee