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Ad infinitum), play in the first game will be as follows: player 1 knows that if he plays U, player 2 will play D' (because for player 2 a payoff of 1 is preferable to a payoff of 0) and so player 1 will receive 2. However, if player 1 plays D, player 2 will play U' (because to player 2 a payoff of 2 is better than a payoff of 1) and player 1 will receive 1. Hence, in the first game, the equilibrium will be (U, D' ) because player 1 prefers to receive 2 to 1 and so will play U and so player 2 will play D'..
That's a key point if LEPs take on new responsibilities as is envisaged in the Heseltine Report their performance and use of taxpayers' money must democratically accountable. At the moment this is a key weakness.As Bailey notes, "it is encouraging that LEPs agree they should be held to account. What is not encouraging is the current lack of any actual mechanisms by which to do so.
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