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Game Theory Dairy farmers Luke and Stan have common access to an empty green paddock perfect for grazing cows. They go to the local cow market and must each decide independently whether to buy 10 or 20 cows. Cows cost $2000. Both Luke and Stan know that the more cows on the paddock, the less productive is each cow. With a total of 20 cows on the paddock, each cow will produce $7000 of milk in its lifetime. With a total of 30 cows on the paddock, each cow will produce $5000 of milk in its lifetime. With a total of 40 cows on the paddock, each cow will produce $4000 of milk in its lifetime. Stan Buy 10 Buy 20 $60000 Buy 10 Luke $30000 Buy 20 (a) Complete the payoff matrix above by calculating (carefully) the payoffs for Luke and Stan associated with each possible outcome. (Reproduce the payoff matrix in your answer) (b) Is this game a Prisoner's Dilemma? Explain. (c) Find the pure strategy Nash equilibrium for this game

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