ECONOMICS 201 SPRING 2012 APPLICATION 3 Please type your responses. We will have a class discussion on Wednesday April 25, 2012. Risky Sex Let's consider the following (potential) sexual encounter between two individuals. Person A may or may not be infected with a life-threatening sexually transmitted infection (STI), whereas Person B is known by both to be uninfected. Suppose that A's strategies are to propose (i) risky sex, (ii) “safe” sex (i.e. less risky sex, since there still is some chance of transmission), or (iii) no sex. B's strategies are to (i) accept A's offer, or (ii) reject A's offer in which case the encounter ends with no sex. 1. For A, what are the costs and benefits associated with risky sex? What about “safe” sex and no sex? 2. For B, what are the costs and benefits associated with risky sex? What about “safe” sex and no sex? 3. Would B accept or reject A’s offer of risky sex if B knew A was infected/uninfected? Would B accept or reject A’s offer of “safe” sex if B knew A was infected/uninfected? 4.
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