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In a two-player one shot simultaneous move game, each player can choose strategy A or strategy B. If both players choose strategy A, each player earns a payoff of $400. If both players choose strategy B, each player earns a payoff of $200. If player 1 chooses strategy A and player 2 chooses strategy B then player 1 earns $100 and player 2 earns $600. If player 1 chooses strategy B and player 2 chooses strategy A then player 1 earns $600 and player 2 earns $100.

1. Write the above game in normal form.

2. Discover each player's dominant strategy, if it exists.

3. Discover the Nash equilibrium or equilibrium of this game.

4. Rank strategy pairs by aggregate payoff (highest to lowest).

5. Can the outcome with the highest aggregate payoff be sustained in equilibrium? Why or why not?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91227449

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