Game Theory - PLAYER A PLAYER B Payoff Scheme Confess Don't...

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PLAYER A PLAYER B Payoff Scheme Confess Don’t Confess Confess Don’t Confess
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1. Key Terms: a. Network Game b. Coordinating game c. Prisoner’s dilemma 2. Player A & Player B can choose to confess or not confess. If both confess, they both get 5 years. If one confesses and the other doesn’t, the one who confesses gets 2 years, while the other gets 10. If neither confess they both get 0 years. a. What is a Player A’s dominant strategy? b. If B is a powerful gang lord with connections on the outside, will this effect A’s dominant strategy c. If B is A’s friend, will this effect A’s dominant strategy? 3. Assume all agents act rationally and are self-interested. A random consumer goes into a restaurant. The waiter must first choose whether or not to give good service or bad service; giving bad service makes his life easier (He values it at $10), while the diner would only derive $5 of benefit from the bad service. The diner can also choose whether or not to leave a tip. If the diner leaves a tip, both he and the waiter derive
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This note was uploaded on 07/01/2011 for the course ECO 304K taught by Professor Hickenbottom during the Fall '10 term at University of Texas at Austin.

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Game Theory - PLAYER A PLAYER B Payoff Scheme Confess Don't...

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