Question 1. Consider the following normal-form game:
Player 2
x y
a 8; 5 2; 7
Player 1 b 0; 0 2; 4
(a) Find and report all of the (pure-strategy) Nash equilibria of this game.
Nash equilibria:
(b) Consider the two-period repeated game in which this stage game is played twice and the repeated-game payos are simply the sum of the payos in each of the two periods. Is there a subgame perfect equilibrium of this repeated game in which (a, x) is played in the rst period? If so, fully describe the equilibrium. If not, explain why.
Circle one: YES NO
Description/explanation: