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Assume two Classmates A and B are assigned an extra group project. Each student can choose to Shirk or Work. If one or more players chooses Work, the project is completed and provides each with extra credit valued at 4 payoff units each. The cost of completing the project is that 6 total units of effort (measured in payoff units) is divided equally among all players who choose to Work and this is subtracted from their payoff. If both shirk, they do not have to expend any effort but the project is not completed, giving each a payoff of 0. The teacher can only tell whether the project is completed and not which student contributed to it.

(A.) Create a payoff matrix for this game assuming students choose to slack or work simultaneously.

(B.) Find the Nash equilibrium and explain why the result you found is a Nash equilibrium.

(C.) What type of game does this resemble? Explain how the outcome in b) can change

Game Theory, Economics

  • Category:- Game Theory
  • Reference No.:- M9741611

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