Question
Player 1 tosses a coin and leaves it as it fell. Without telling player 2 which side is up, player 1 claims to tell which
Player 1 tosses a coin and leaves it as it fell. Without telling player 2 which side is up, player 1 claims to tell which side it fell. Player 1 may lie or tell the truth. Player 2 must then guess whether or not player 1 has told the truth. The coin is then revealed to player 2, If caught in a lie, player 1 must pay player 2 R6; if falsely accused of lying, player 1 collects R5 from player 2. If player 1 tells the truth and player 2 guesses that player 1 has told the truth, then player 1 must pay R1 to player 2. If player 1 lies and player 2 does not guess that player 1 has lied, player 1 wins R5 from player 2. Determine the value of this game and each player's optimal strategy.
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