-Consider the two-stage game depicted in Figure 5.2 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 X in stage 1 and play Y in stage 2.
B) Play Y in stage 1 and play Z in stage 2.
C) Play X in stage 1 and play Z in stage 2.
D) Play X in stage 1 and stage 2.
E) Play Y in stage 1 and stage 2.

Question

-Consider the two-stage game depicted in Figure 5.2 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 X in stage 1 and play Y in stage 2. 
B) Play Y in stage 1 and play Z in stage 2. 
C) Play X in stage 1 and play Z in stage 2. 
D) Play X in stage 1 and stage 2. 
E) Play Y in stage 1 and stage 2.

Quizplus · Accepted Answer

The Answer is E

-Consider the Two-Stage Game Depicted in Figure 5