Question: Hello. Image one is just a reference R 1. G P T 3033 II! P Consider a binary choice version of the moonlighting game in

Hello. Image one is just a reference

Hello. Image one is just a reference R 1. G P T

3033 II! P Consider a binary choice version of the moonlighting game

R 1. G P T 3033 II! P Consider a binary choice version of the moonlighting game in which two players, 1 and 2, are both endowed with 12. Player 1 can choose either G) to give away 2, in which case player 2 receives the quadrupled amount 8, or 7) to take 3, in which case player 2 loses 3. Player 2 may then choose either R) to reward player 1 with 3 at a cost to player 2 of 3, or P) to punish player 1 and reduce ls payoff by 6 at a cost of 2 to player 2. Thus, player l's strategy set is {G,T}, and player 2s strategy set is {R,P}. 1. Calculate each player's payoffs, {Tl2, 12}, for every strategy profile (GR, GP, TR, TP), and enter them in the game tree on the cover sheet. Egoistic preferences Suppose for problems 2 to 4 that players have egoistic preferences, specifically, U; = x;,i = 1,2. As usual, justify claims with reference to values. 2. What is 2's best response (R or P) to 1 choosing G? 3. What is 2s best response (R or P) to 1 choosing T? 4. Which strategy profile (GR, GP, TR, or TP) is the subgame perfect Nash equilibrium

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