Question
John and Paul are walking in the woods one day when suddenly an angry bear emerges from the underbrush.They each can do one of two
John and Paul are walking in the woods one day when suddenly an angry bear emerges from the underbrush.They each can do one of two things: run away or stand and fight.If one of them runs away and the other fights, then the one who ran will get away unharmed (payoff of 0) while the one who fights will be killed (payoff -200).If they both run, then the bear will chase down one of them and eat them to death but the other one will get away unharmed.Assuming they don't know which one will escape we will call this a payoff of -100 for both.If they BOTH fight, then they will successfully drive off the bear but they may be injured in the process (payoff -20).
Construct a payoff matrix for this game and identify the pure strategy Nash equilibrium.(Indicate it with words not with a circle!)
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