Scenario: Jim and Janis must complete a task together at their job. Jim can put no effort, low effort, or high effort into the job, while Janis, being more conscientious than Jim, has choice of low effort or high effort. Their compensation, summarized in the payoff matrix below (in thousands of dollars), depends on the quality of their work, which in turn depends on the efforts they put into the task. The first number in each cell is Jim's payoff, and the second number is Janis' payoff.

-Refer to the scenario above.If a

Question

Scenario: Jim and Janis must complete a task together at their job. Jim can put no effort, low effort, or high effort into the job, while Janis, being more conscientious than Jim, has choice of low effort or high effort. Their compensation, summarized in the payoff matrix below (in thousands of dollars), depends on the quality of their work, which in turn depends on the efforts they put into the task. The first number in each cell is Jim's payoff, and the second number is Janis' payoff.
 
-Refer to the scenario above.If a < 3,then ________ form a Nash equilibrium.
A) low efforts by both workers 
B) high efforts by both workers 
C) low effort by Jim and high effort by Janis 
D) high effort by Jim and low effort by Janis

Quizplus · Accepted Answer

If a < 3, both workers choosing low effort is a Nash equilibrium because neither worker has an incentive to unilaterally change their strategy given the strategy of the other. High effort would not be rational due to the cost exceeding the benefit.

Scenario: Jim and Janis Must Complete a Task Together at Their