To the right is the complete game tree for this two player two strategy game. In this game Firm 1 must decide whether or not to advertise. Once it has made that decision then Firm 2 must make a similar choice. Once Firm 2 has made its decision we are at the end of the game and we find the payoffs depending on what decisions were made.

   As before, this is a game of complete information. Each firm knows the choices facing the other, the payoffs that will be received depending on where the game ends and Firm 2 will know what Firm 1 chose. In this case if both advertise Firm 1 receives 6 while Firm 2 receives 4. If Firm 1 doesn't advertise and Firm 2 does, Firm 1 receives 3 while Firm 2 receives 9. We will learn later how to solve a game such as this but for now, just be certain that the setup is clear.

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