1. Use the following payoff table and the concept of a Nash equilibrium to determinewhethereachparty(corporations andstandardsetters)willplaystrongandnotcompromisewith respect to a proposed accounting standard or will compromise to find a solution bothparties can live with. In other words, identify the Nash equilibrium solution. Assume thegameis non-cooperative.Payoffs arelistedintheorder(corporations,standardsetter).

2 Does the Nash equilibrium change if the corporations' payoffs for playing strong aredecreasedby5nomatterwhatthestandardsetterdecides todo?Explainwhytheydoordonotchange.

3 This table is a model to predict how a change in accounting standards would benegotiatedbetweencorporationsandstandardsetters.Whatactualeventoreventsmightcausecorporations' payoffs to decreaseasdescribedin #2

		StandardSetter
		Compromise	PlayStrong
Corporations	Compromise	30,30	8,40
PlayStrong	20,10	12,15