Game Matrix II
The following questions refer to the game matrix below. Player A can play the strategies "High" and "Low," and Player B can play the strategies "Odd" and "Even."

-Refer to Game Matrix II.Assume this game is played sequentially.When is the Stackelberg equilibrium of this game also Pareto optimal?
A) Always.
B) When A is the first player.
C) When B is the first player.
D) Never.

Question

Game Matrix II
The following questions refer to the game matrix below. Player A can play the strategies "High" and "Low," and Player B can play the strategies "Odd" and "Even."

-Refer to Game Matrix II.Assume this game is played sequentially.When is the Stackelberg equilibrium of this game also Pareto optimal?
A) Always. 
B) When A is the first player. 
C) When B is the first player. 
D) Never.

Quizplus · Accepted Answer

In the sequential game, A is the first mover and can select strategy A1 or A2. B observes A's choice and then chooses strategy B1 or B2. 
If A chooses A1, B will choose B1 (to get the highest outcome of 5). 
If A chooses A2, B will choose B2 (to get the highest outcome of 4). 
Thus, A is better off choosing A2 instead of A1 because it guarantees him 4 instead of uncertain 3. 
Therefore, the Stackelberg equilibrium is (A2, B2) where A chooses A2 and B chooses B2. This outcome is also Pareto optimal as no player can be made better off without making the other player worse off.

Game Matrix II The Following Questions Refer to the Game Matrix Below. Player