-Consider the two-stage, static game depicted in Figure 5.1 involving two companies that enter into an agreement to maximize total profits. The payoffs in this game are in millions of dollars. The optimal strategy for both firms is to:
A) Play B in stage 1 and stage 2.
B) Play B in stage 1 and play A in stage 2.
C) Play C in stage 1 and stage 2.
D) Play B in stage 1 and play C in stage 2.
E) Play C in stage 1 and play B in stage 2.

Question

-Consider the two-stage, static game depicted in Figure 5.1 involving two companies that enter into an agreement to maximize total profits. The payoffs in this game are in millions of dollars. The optimal strategy for both firms is to:
A) Play B in stage 1 and stage 2. 
B) Play B in stage 1 and play A in stage 2. 
C) Play C in stage 1 and stage 2. 
D) Play B in stage 1 and play C in stage 2. 
E) Play C in stage 1 and play B in stage 2.

Quizplus · Accepted Answer

The Answer is A

-Consider the Two-Stage, Static Game Depicted in Figure 5