Quiz 7_Solutions - Finance 30210 Quiz#7 Name Section 1...

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Finance 30210 Quiz #7 Name__________________________ Section_________ 1) Consider the following game (Player one’s payoffs are in bold): Player Two Cooperate Cheat Player One Cooperate $17 $17 $0 $20 Cheat $10 $0 $15 $15 a) What is each player’s optimal strategy? Does either player have a dominant strategy? Explain.
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Unformatted text preview: Player 1: If player 2 cooperates, cooperate. If Player 2 cheats, cheat Player 2: Always cheat Player 2 has a dominant strategy in that his best move is to always cheat regardless of what player 1 is doing. b) What is the Nash equilibrium for this game? The Nash equilibrium is for both sides to cheat....
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