Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1. [30 Points] We will continue with our model of the petrol crisis. Assume that there are two people living on an island and
1. [30 Points] We will continue with our model of the petrol crisis. Assume that there are two people living on an island and each person has two actions: keep buying petrol as normal or rush to the petrol station and fill up the tank. When both players buy as normal, the petrol supply would be enough for the two, and hence no single player has any incentives to rush. In fact, when all players keep buying as normal, rushing unilaterally will incur a small cost (e.g. one has to give up their normal routine, go to the gas station with half full tanks etc.). If one player rushes, however, the other has incentives to do so too, for waiting when the other player rushes results in the worst outcome for the player who waits. a) Create a game using this scenario assuming that players decide simultaneously. Assign payoffs for all possible strategy combinations, carefully arguing and justifying why you assigned a particular payoff to a particular strategy combination. Any reasonable payoffs are allowed, provided that the game is within the general framework given above and the payoffs are justified well. Find all Nash equilibria and all evolutionarily stable strategies in this game you created.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started