-Suppose that the game depicted in Figure 11.5 is modeled as a multistage game with Magna Corporation moving first. The subgame perfect equilibrium for this game is:
A) {Extensive 6 None}
B) {Moderate 6 None}
C) {None 6 Extensive}
D) {Moderate 6 Moderate}
E) {None 6 None}

Question

-Suppose that the game depicted in Figure 11.5 is modeled as a multistage game with Magna Corporation moving first. The subgame perfect equilibrium for this game is:
A) {Extensive 6 None} 
B) {Moderate 6 None} 
C) {None 6 Extensive} 
D) {Moderate 6 Moderate} 
E) {None 6 None}

Quizplus · Accepted Answer

The subgame perfect equilibrium is {Extensive 6 None} because Magna Corporation will always choose Extensive in the first stage, and then the other player will choose None in the second stage.

-Suppose That the Game Depicted in Figure 11