Question
Consider the following payoff matrix, where the payoffs are profits in thousand $. Explanation of payoff: If Player 1 chooses Strategy A and player 2
Consider the following payoff matrix, where the payoffs are profits in thousand $.
Explanation of payoff: If Player 1 chooses Strategy A and player 2 chooses Strategy B then Player 1 gets $150,000 and Player 2 gets $140,000
Player 2
Strategy A BC
A280, 220150, 140300, 150
Player 1
B260, 240130,220280, 145
C240, 225120, 130290, 230
1.Find the Nash equilibrium if the players make the decisions simultaneously.
2.Do either player have a dominant strategy? Is this a prisoner's dilemma problem?
3.Find the outcome if both players are risk averse and choose a maxi-min strategy.
4.Now consider the game as sequential.How much would player 2 invest to be the first mover?
5.Is there any potential for side payments? If so, who will pay and how much? Explain clearly.
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