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Week4ProblemsAndres

# Week4ProblemsAndres - 1 True or False Chicken Game Jim and...

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1 True or False Chicken Game: Jim and Plato are racing towards each other in their sports cars at 100mph. Each of them can stay course or chicken out and swerve. If 5 . If Jim keeps going straight and Plato chickens out, Jim will gain the admiration of Judy for a utility of 5 and Plato looses in social prestige for a total utility of 0 , and vice versa. If both chicken out, the loss in prestige is not as great: utility 2 . Plato S C Jim S 5 , 5 5 , 0 C 0 , 5 2 , 2 This game has the following Nash equilibria: a) Only (S,C) and (C,S) b) (S,C), (C,S) and ( 3 8 S + 5 8 C; 3 8 S + 5 8 C ) c) (S,C), (C,S) and ( 5 8 S + 3 8 C; 5 8 S + 3 8 C ) d) Only ( 5 8 S + 3 8 C; 5 8 S + 3 8 C ) Correct answer is b) 2 Problem A B , which choose how many lollipops to sell. Firm A B A

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Week4ProblemsAndres - 1 True or False Chicken Game Jim and...

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