Question
Two friends, Juan and Marcus, run into each other at Northgate and agree to meet later for a drink. They come up with a couple
Two friends, Juan and Marcus, run into each other at Northgate and agree to meet later for a drink. They come up with a couple of places where they could meet and agree on the place, but as they leave separately, neither can remember if they decided to meet at the Tipsy Turtle or the Backyard. It is late, and they can only go to one bar to find each other. Additionally, both of their phones are out of battery so they cannot text one another. If Juan and Marcus both meet at the Tipsy Turtle, their favorite bar, they will both receive a utility of 10. If Marcus goes to the Tipsy Turtle and Juan goes to the Backyard, Marcus will have a utility of 4 while Juan will have a utility of 1. If Marcus goes to the Backyard and Juan goes to the Tipsy Turtle, Marcus will have a utility of 1 while Juan will have a utility of 4. If they both go to the Backyard, they both receive a utility of 8.
(a) Write the above scenario (normal-form game) in a matrix. (b) What are the best responses for Marcus and Juan, for each other's strategies? (c) What is Marcus' dominant strategy? What is Juan's dominant strategy? (d) What is the (pure strategy) Nash equilibrium(ia), if any? Which is payoff dominant? Which is risk dominant?
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