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Consider the following single-shot static game played between Bill and Ben who are choosing where to go for their summer holiday. Bill does not want
Consider the following single-shot static game played between Bill and Ben who are choosing where to go for their summer holiday. Bill does not want to spend much money and would like to have a Staycation. Ben wants to go to Disney World. Bill will always prefer the Staycation rather than going to Disney World. In contrast, Ben will always prefer holidaying in Disney World to the Staycation. As neither wants to be alone though the most important consideration for both is that they go to the same holiday destination. (a) Using the numbers 1, 2, 3 and 4 to rank the preferences of Bill and Ben, and represent this game in its normal form. [8 marks] (b) With accompanying discussion, identify any pure strategy Nash equilibria in this game. [5 marks] (c) By constructing the best response lines of both players, identify all Nash equilibrium outcomes in the above game. [12 marks]
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