Question: Consider the following sequential game. Player 1 plays first, and then Player 2 plays after observing the choice of Player 1. At the bottom of
Consider the following sequential game. Player 1 plays first, and then Player 2 plays after observing the choice of Player 1. At the bottom of the decision tree, the first number represents the payoff of Player 1, while the second number represents the payoff of Player 2. For player 2, A stands for Accommodate and F stands for Fight. In the Nash equilibrium of this game, player 2 earns 30 . Player 2 does not have an incentive to threaten F because, if player 1 believed him then player 1 would play Enter so that player 2 would earn 30 . However, this threat is not credible (an empty threat)
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