3 Consider a game with two players and in which each player is asked a question. The players can answer the question honestly or lie. If both answer honestly, each receives €100. If one answers honestly and the other lies, the liar receives €500 and the honest player gets nothing.

If both lie, then each receives €50.

a Describe strategies and payoffs of this game.

b Construct the payoff matrix.

c What is the equilibrium of this game?

d Compare this game with the prisoners’ dilemma.

Are the two games similar or different? Explain your answer.