Question
Answer all questions 1. Recently, your financial advisor Biff convinced you to move all of your funds from your (federally insured) bank accounts to a
Answer all questions
1. Recently, your financial advisor Biff convinced you to move all of your funds from your (federally insured) bank accounts to a promising (uninsured) investment fund. It sounded like a good idea at the time but a flurry of recent texts from friends suggests otherwise. The fund may or may not be in trouble but not one of you knows and no one can find any useful information. All of you are deciding whether or not to keep your money in the fund or withdraw it.
Think of this as a game where you and everyone else with money in this fund are the players. (Note:it is common in some games with multiple players to simplify by having Player 1 is an individual and 'everyone else' as Player 2). Suppose you and everyone else have only two strategies: Keep your money in the fund OR withdraw all of your money.
Assume that if you and everyone else withdraw your money, the fund goes out of business (bad). If none of you withdraw any money, the fund survives (good).
Set up this game such that it is a Prisoners' Dilemma. You decide what the payoffs are (e.g., levels of utility).Include a payoff matrix of your game and a brief narrative describing the outcome.
2. Consider the following non-cooperative, 2-player game. The payoffs for each player are ordinal levels of utilitylarger numbers are preferred to smaller numbers. Player 1's payoffs are listed first in each box.
Find any and all Nash equilibria and describe how you found it/them. Does either player have a dominant strategy?If so, what is it for each player?Briefly explain.
Is there a Pareto improving outcome? Briefly explain.
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