Tracy and Amy Are Playing a Game in Which Tracy

question 25

Multiple Choice

Tracy and Amy are playing a game in which Tracy has the first move at X in the decision tree shown below. Once Tracy has chosen either the top or bottom branch at X, Amy, who can see what Tracy has chosen, must choose the top or bottom branch at Y or Z. Both players know the payoffs at the end of each branch. The equilibrium to the game results in ______ for Amy and Tracy relative to what they could get if they could solve their ______.

• A)lower payoffs; prisoner's dilemma
• B)higher payoffs; commitment problem
• C)lower payoffs; credible threat
• D)lower payoffs; commitment problem

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