Use the following setting for questions 1-3. Consider the following static game:Suppose this game is played for two periods. At the beginning of period 2, the players can observe the outcome from period 1. There is no discounting.
1. First, assume only pure-strategy SPNE such that either player’s second period strategy DOES NOT depend on the first period outcome. How many such SPNE are in this game?
(a) 0
(b) 1
(c) 2
(d) 3
(e) 42
2. Consider ONLY SPNE from the previous question. What is the maximum sum of the players’ payoffs that can be achieved in the two periods combined?
(a) 3
(b) 4
(c) 7
(d) 9
(e) 123
3. Now consider ALL possible pure-strategy SPNE such that (T,L) is played in the first period. What must be the equilibrium outcome in the second period of such SPNE?
(a) (T, L)
(b) (M, L)
(c) (B, R)
(d) (T, R)
(e) There are no such SPNE
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