Reference no: EM132586873

The figure below describes the events following the 2001 Enron scandal. In this highly publicized case, the prosecutors adopted the strategy of dealing their way up the corporate ladder. First, the prosecutor chooses among offering a deal to Delainey (D) -a mid level executive-, offering a deal to Fastow (F) -Chief Financial Officer-, or offering no deal at all (N). Each of these employees can accept (A) or reject the deal (R). Additionally, after receiving an acceptance by Delainey, the prosecutor decides whether to offers a deal to Fastow (F) or to offer no further deal (N). The first payoff corresponds to the Prosecutor, the second to Delainey, and the third one to Fastow.

(a) Write the strategic form for this game (matrix form). Please let the Prosecutor be player 1 (the row player), Delainey be player 2 (the column player), and let Fastow be player 3 the player choosing matrices.

(b) Find all pure-strategy Nash equilibria. Write down the equilibrium strategy profile(s).

(c) Solve the game by backward induction. Write down the backward induction strategy profile