Suppose there are two players in a game below. For each

pair of payoff numbers, the first number is the payoff of Player R and the second

number is the payoff of Player C.

a. (6 points) Given that the players move simultaneously,

I. Identify any dominant strategies in this game and explain. (2 points)

II. Find any Nash equilibrium and explain why it is a Nash equilibrium.

(4 points)

b. (10 points) Now suppose the firms move sequentially, with Player R moving

first.

I. Draw a game tree. (3 points)

II. Identify any subgame perfect Nash equilibrium in this sequential

move game. Explain why it is a subgame perfect Nash equilibrium. (7

points)