FIGURE 6 SEQUENTIAL-MOVE GAME ILLUSTRATED IN A GAME TREE
imageA sequential-move game is illustrated between Virgin and SpaceX. Virgin makes the first move to either pursue or pull back. After seeing Virgin’s decision, SpaceX responds by choosing to pursue or pull back. For each possible outcome, a payoff results for each firm. The first number in each outcome is Virgin’s payoff, and the second number is SpaceX’s payoff. Because Virgin can anticipate SpaceX’s response to each of its two strategies, Virgin’s best action is to pursue, and SpaceX’s best response to this move is to pull back.