Question
Consider the following Trust Game. Player A has $100 and chooses whether to give some of the money to Player B or not. To keep
Consider the following Trust Game. Player A has $100 and chooses whether to give some of the money to Player B or not. To keep it simple, he can either give $50 or $0. If he gives up $50, then B magically receives $150 (maybe think of it as an investment that B profits from). If A gave B $50 (which turned into $150), then Player B has the choice to give back either $75 or $0. Therefore, the strategy space for A is {0, 50} and the strategy space for B is {75, 0}. A's payoff is either $100 (if she keeps it all), $50 (if she gives half and receives nothing back), or $125 (if she gives half and receives money back). B's payoff is either $0 (if A keeps it all), $150 (if A gives half and he gives nothing back), or $75 (if A gives half and he gives money back). Solve for all pure strategy and mixed strategy Nash Equilibrium.
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