The following payoff matrix shows the outcomes for the United States and Russia from relying on conventional weapons versus atomic weapons in a military conflict. The percentages refer to the fraction of the population that would die. This situation above illustrates a positional externality because:
A)using atomic weapons is a dominated strategy.
B)using atomic weapons improves each country's outcome but hurts the other country.
C)the game does not have a Nash equilibrium.
D)no matter what kind of weapons each country chooses, many people will die.

Question

The following payoff matrix shows the outcomes for the United States and Russia from relying on conventional weapons versus atomic weapons in a military conflict. The percentages refer to the fraction of the population that would die.  This situation above illustrates a positional externality because:
A)using atomic weapons is a dominated strategy. 
B)using atomic weapons improves each country's outcome but hurts the other country. 
C)the game does not have a Nash equilibrium. 
D)no matter what kind of weapons each country chooses, many people will die.

Quizplus · Accepted Answer

A positional externality arises in situation in which reward depends on relative performance so that an increase in one person's (or country's)performance reduces the expected reward of another's.

The Following Payoff Matrix Shows the Outcomes for the United