Question

Imagine two bored online classmates, Taylor and Adam are playing a "poke and tell" game. Taylor can poke (P) Adam or not (N) and Adam can tattle (T) on Taylor or keep quiet (Q). If Taylor hits Adam and he tattles they both experience a loss of 10. Keeping quiet gets Adam a sweet bruise, a loss of 5, and Taylor gains 5. If Adam tattles untruthfully, he gets a gain of 5 for stirring up trouble, and Taylor gets in trouble for nothing, losing 5. If they get along, no one gets anything.

• a. Assume the game is simultaneous. Depict the normal form of the game. Use best responses to find all PSNE.
• b. Now, suppose this is a sequential game of perfect info, in which Taylor goes first. Draw the game tree. Using backward induction, find all BINE.
• c. Now, suppose this is a sequential game of perfect info, in which Adam goes first. Draw the game tree. Using backward induction, find all BINE.
• d. Is there a first-mover or second-mover advantage in this game? How can you see this? Compare this to the first, simultaneous game.

Answer 1