Lee and Cody are playing a game in which Lee has the first move at A in the decision tree shown below. Once Lee has chosen either aggression or cooperation, Cody, who can see what Lee has chosen, must choose either aggression or cooperation at B or C. Both players know the payoffs at the end of each branch. 
Suppose Cody tells Lee that if Lee chooses aggression, then Cody will also choose aggression, and if Lee chooses cooperation, then Cody will also choose cooperation. Cody's statement is:
A. a commitment device.
B. a description of the two equilibria in this game.
C. credible.
D. not credible.
Answer: D
You might also like to view...
Which of the following is held constant when moving along a short-run Phillip's curve?
A) The inflation rate B) The unemployment rate C) The expected inflation rate D) The growth rate of the quantity of money
You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully
Compared to the private sector, the distinguishing characteristic of government is its
What will be an ideal response?
Which of the following statements about markets is not true?
A. Markets necessarily have a physical location. B. The two types of markets include the factor and product markets. C. Every market transaction involves an exchange of money for goods or resources or a direct exchange of goods or resources without money called barter. D. Markets have both a demand side and a supply side.