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: