Use the following setting for questions 1-3. Consider thefollowing static game: Suppose this game is...
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Economics
Use the following setting for questions 1-3. Consider thefollowing static game: Suppose this game is played for two periods.At the beginning of period 2, the players can observe the outcomefrom period 1. There is no discounting. 1. First, assume onlypure-strategy SPNE such that either player's second period strategyDOES NOT depend on the first period outcome. How many such SPNE arein this game? (a) 0 (b) 1 (c) 2 (d) 3 (e) 4 2. Consider ONLY SPNEfrom 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) 12 3. Now consider ALL possible pure-strategySPNE such that (T,L) is played in the first period. What must bethe equilibrium outcome in the second period of such SPNE? (a) \((\mathrm{T}, \mathrm{L}) \) (b) \( (\mathrm{M}, \mathrm{L}) \) (c)\( (\mathrm{B}, \mathrm{R}) \) (d) \( (T, R) \) (e) There are nosuch SPNE
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