Question 7 of 10
2 answers:
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Answer:
The data is missing, so I looked for a similar question (see attached image).
in a subgame perfect equilibrium, players take turns, one player (GM) will take turn an make an offer to the second player (Securitex), and then the second player will decide whether to accept the offer or not. The situations where the offer is rejected are not really an equilibrium since basically GM and Securitex get nothing out of the deal.
The two remaining options where Securitex accepts the offer must be analyzed in the following way:
After GM makes its move, is Securitex going to be better off or not. If GM makes a high offer and Securitex accepts it, then both will be better off. But if GM makes a low offer and Securitex accepts, it, GM will be better off but Securitex will be worse off, so that is not a real equilibrium.
The only option where a real equilibrium happens and is accepted by both, is that GM makes a high offer and Securitex accepts it. This would be option C.
