Advanced Microeconomics, Game Theory.25. Stephen J. Seagull must decide whether or not to start a new movie project. If he decidesnot to, he and Clod VandeCamp both get a utility of ten. If he decides to begin theproject, both he and Clod must simultaneously decide who the director should be: GeorgeSpellbinder, or Ed Tree. If they disagree on the director, the movie isn’t made, but bothhave wasted time, so they get only a utility of zero. If they agree on George Spellbinder,the movie will be a roaring success, and each gets a utility of 20. If they agree on EdTree, the movie will be terrible, and they will only get a utility of 5. Draw the extensiveform of this game. Find the normal form. Find all the Nash equilibria. Find all thesubgame perfect equilibria. Apply the theory of iterated weak dominance.
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