Question 3:

Cochise Downs and Geronomo Park are horse racing tracks where people can bet on the outcomes of horse races. They each are simultaneously considering adding slot machines as a way to expand their profits. The game chart below shows the expected stream of profits (in thousands of dollars) for each firm based on whether or not they add and/or their competitor adds slot machines.

. Geronomo Park

Cochise Downs	Add Slot Machines	No Slot Machines
Add Slot Machines	$270, $280	$280, $250
No Slot Machines	$150, $360	$300, $300

1. Cochise and Geronomo move simultaneously. Describe the Nash equilibrium(s) that will result. Make sure to explain in depth why the equilibrium(s) exist.

b. What would be the Nash equilibrium(s) if Cochise moved first and then Geronimo moved second? Explain your choice.

c. What is the definition of a prisoner's dilemma? Would the situation in part a be considered a prisoners' dilemma. If it is, explain why it fits the definition of a prisoners' dilemma. If it is not, change the numbers in such a way that it becomes a prisoners' dilemma and explain why it now fits the definition.