Suppose there is a joint project that generates an amount 10 for each of theindividuals A and B, provided the sum total of A's and B's investments in the project isat least 7. Suppose A's investment is denoted by x and B's by y, where r and y can takeany values in {0,1,2,3,4..8,9,10}. A player always has to incur the cost of the investment(equal to æ or y respectively) and gets the benefit if and only if the project goes ahead.Suppose each player is interested in his own net benefit (benefit-cost) and players choosetheir investment levels simultaneously. The following relate to pure strategies.(a) Is there a Nash equilibrium in which both players invest 0?(b) Is there a Nash equilibrium in which one player invests 0 and the other does not?(c) What is the lowest payoff a player can get in any Nash equilibrium?

Nash equilibrium means that there shouldn't be any unilateral deviation.

Answered: Suppose there is a joint project that…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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10,10 6,10 R C No Driving School D Driving School C W 4,4 G (1/4) 0,4 10,0 B (3/4) 3,0 R C No Driving School D Driving School C W 4,4 -3,4 he company's (C's) strategies are: ORif No Driving School and R if Driving School Rif No Driving School and W if Driving School O W if No Driving School and R if Driving School W if No Driving School and W if Driving School all of the above
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Please no written by hand and no emage Two classmates A and B are assigned a group project. Each student can choose to Shirk or Work. If one or more students chooses Work, the project is completed and provides each with credit valued at 4 payoff units each. The cost of completing the project is that 6 total units of effort (measured in payoff units) is divided equally among all players who choose to Work and this is subtracted from their payoff. If both Shirk, they do not have to expend any effort but the project is not completed, giving each a payoff of 0. The instructor can only tell whether the project is completed and cannot determine which students contributed to the project. A. Write down (draw) the normal form game, with payoff in the format of (player A payoff, player B payoff). Note that we assume students choose to Shirk or Work simultaneously. B. Does either player have a dominant strategy? C. Find the Nash equilibrium or equilibria. D. Explain ‘Prisoners’ dilemma’ using the…
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