Refer to the following payoff matrix:
$\begin{array}{r}
\text { Player } 2\
\text { Player } 1
\begin{array}{|l|l|l|}
\hline& \text { a} & \text { b} \
\hline & & \
\text { A } Q & \$ 50, \$ 5 & \$ 15, \$ 30 \
\hline & & \
\text { B } Q & \$ 40, \$ 2 & \$ 2, \$ 1\
\hline
\end{array}
\end{array}$ Suppose the simultaneous-move game depicted in the payoff matrix could be turned into a sequential-move game with player 1 moving first.In this case,the equilibrium payoffs will be:
A) ($20, $1)
B) ($50, $5)
C) ($40, $2)
D) ($15, $30)

Question

Refer to the following payoff matrix:
$\begin{array}{r}
\text { Player } 2\
\text { Player } 1
\begin{array}{|l|l|l|} 
\hline& \text { a}  & \text { b}  \
\hline & & \
\text { A } Q & \$ 50, \$ 5 & \$ 15, \$ 30 \
\hline & & \
\text { B } Q & \$ 40, \$ 2 & \$ 2, \$ 1\
\hline
\end{array}
\end{array}$ Suppose the simultaneous-move game depicted in the payoff matrix could be turned into a sequential-move game with player 1 moving first.In this case,the equilibrium payoffs will be:
A) ($20, $1)
B) ($50, $5)
C) ($40, $2)
D) ($15, $30)

Quizplus · Accepted Answer

In the sequential-move version of this game, if Player 1 chooses action A, Player 2 will respond with action a, since this yields Player 2 the highest payoff of \$50. If Player 1 chooses action B, Player 2 will respond with action b, as b yields Player 2 \$30, which is more than the \$5 they would get from choosing a. Therefore, the unique subgame perfect equilibrium of this game is for Player 1 to choose action B, and for Player 2 to choose action b, resulting in payoffs of ($40, $2).

Refer to the Following Payoff Matrix Suppose the Simultaneous-Move Game Depicted in the Payoff Matrix Could