a) in this game firm 1 moves first b) in this game firm 2 moves first c) in this

Question

a) in this game firm 1 moves first
b) in this game firm 2 moves first
c) in this game the two firms move simultaneously
d) you cannot determine from the information given which, if any of the two firms moves first
e) in this game firm 1 can see firm 2's moves before it decides what strategy to play

ully given period. uliorium the higher is the e robabilitll u nlayer game in extensive form. The firms' strategies are high The payoffs appear at the bottom, with the upper payoff e this information to answer questions 5-7. game er the following der t (ionodn to rm 1. Use Firm 1 Firm 2--> R 13 10 10 Firm 1 Firm 2 12 10 12 erning the game above are correct?

Explanation / Answer

The Game Tree diagram of given sequential game shows that, at first, Firm 1 makes decision regarding whether to produce high output (H) or low output (L).

Firm 2 responds to the decision of Firm 1 and decides whether to produce high output (H) or low output (L).

So, in this game, Firm 1 moves first.

Apart from this, Firm 2 can observe decision of Firm 1

However, Firm 1 can not observe the decision of Firm 2.

Hence, the correct answer is the option (a).

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