Consider the following sequential game. We want to find subgame perfect Nash equilibrium (SPNE) by using backward induction. Tasty Pizza Veggie BBQ Prawn Pizza Jazz Pizza Jazz Pizza Jazz 7 meats Seabod Jazz 7 meats Seafood Jazz 7 meats Seafbod Jazz (18,11) (8,8) (9,9) (20,12) (16,13) (5,1) (17,17) (16,19) (18,17) (a) Find the equilibrium strategy of Pizza Jazz: • the optimal action of Pizza Jazz at its left node is 7 meats • the optimal action of Pizza Jazz at its middle node is Seafood • the optimal action of Pizza Jazz at its right node is Seafood (b) The equilibrium strategy of Tasty Pizza is Veggie Therefore, SPNE is: • Tasty Pizza plays Veggie • Pizza Jazz plays ( 7 meats Seafood Seafood

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