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Two suspects are arrested and charged with a crime. The police lack sufficient evidence to convict the suspects, unless at least one confesses. The police hold the suspects in separate cells and explain the consequences that will follow from the actions they take. If neither confesses then both will be convicted of minor offenses and sentenced to one month in jail. If both confess then both will be sentenced to jail for six months. Finally, if one confesses but the other does not, then the confessor will be released immediately but the other will be sentenced to 9 months in jail (six months for the crime and 3 months for obstructing justice).

(a) What is Prisoner 1's dominant strategy? Prisoner 2's?

(b) What is the Nash equilibrium outcome of this game?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9476535

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