Question
Wanda is a high school student. At the end of each year she brings her grades to her mom on a general piece of paper
Wanda is a high school student. At the end of each year she brings her grades to her mom on a general piece of paper that follows a replicable format. Unfortunately, Wanda can falsify the grades before delivering them to her mom. Thus, her mother can decide whether to call the school to confirm that the grades are true or false. The probability of Wanda to receive bad grades (B) in a year is 60%, and the probability of Wanda to receive good grades (G) in a year is 40%. If Wanda shows the piece of paper with bad grades, mom will be angry with Wanda but will be calmed inside because mom will believe that Wanda is telling the truth (Why being reprimanded if it is not necessary?). Therefore, Wanda's utility is -6 and mom's utility is 6 independent on whether mom calls to confirm or not. If Wanda shows the piece of paper with good grades, her mom can call the school to confirm the grades are correct. However, mom does not enjoy calling to the school. If mom calls and the grades are incorrect, mom will be angrier with Wanda and more stressed than before. In this case, Wanda's utility reduces to -8 and mom's utility reduces to 3 (somehow, mom is happy to discover Wanda's lie). Conversely, if mom calls and the grades are correct, mom and Wanda receive utility of -1 because mom does not like to call the school and Wanda is sad her mom does not trust her. If mom decides not to call to the school, both mom and Wanda receive a utility of 0. Consider that Wanda has the following four strategies. AG: Always Good, i.e., always show good grades to mom. AO: Always Opposite, i.e., always show opposite grades to mom (show good grades if received bad grades or show bad grades if received good grades). AC: Always Consistent, i.e., always show consistent grades to mom (show good grades if received good grades or show bad grades if received bad grades). AB: Always Bad: always show bad grades to mom (always bad). On the other hand, mom has two strategies. C: Call, i.e., call the school to confirm. N: Do Not Call, i.e., do not call the school to confirm.
Question: If p denotes the fraction of times that Wanda plays strategy AB, and q denotes de fraction of times that mom plays strategy C. What is the mixed strategy Nash equilibrium of this game? why
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