In every scenario in life you can make the situation better by eliminating one of the unwanted options. It’s almost like a process of elimination and getting rid of the unfavorable outcomes. This brings me to the last part in the question. “As the employee, is there anything you can do to realize a higher payoff? ” again, in the Tree of sequential move games, when you work backwards, it is very obvious which unfavorable outcomes need to be eliminated. And when you do this you are left in the good. 5-6 in reference to the equilibrium of the game, I guess that would be referring to the point at which the entrant and the incumbent both are equal so there is no pressure on either of them to perform. Therefore, that would mean staying at a loss of 5 for each player. I’m Just about there The second half of the question refers to discussing if the entrant is better off with or without the ability to withdraw. Well, withdrawing to me always means the entrant gains nothing.
This question however states that the entrance will suffer a loss of 1 in the incumbent will have a gain of 8.
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