Maya and Paul want to watch a movie. There are two movies available: a comedy and an action film. Maya loves comedies whereas Paul enjoys action films.
a. As separate individuals, which movie will Maya choose? Which one will Paul choose? Why?
b. If Maya and Paul are on a date, what factors (other than the movie genre) would affect their choices? If Maya decides to watch the comedy, which movie should Paul choose to get the highest payoff?
c. Suppose a group of people just came out of the movie theater gushing about how great the comedy was and another group complaining that the action film was really bad. What movie should Maya and Paul choose? How is this herd behavior? How can it lead to an information cascade?