Two fishing firms share a common fishery. One strategy available to the firms is to fish sustainably. This maintains a healthy breeding population of fish, and keeps the price of fish relatively high. The other strategy is to overfish. This reduces the breeding population and fish prices tend to fall. The game is represented in the following table:
Explain what the Nash equilibrium for this game is and identify the profit each player gets at this solution. Is the Nash equilibrium the best social outcome for this problem?

Question

Two fishing firms share a common fishery. One strategy available to the firms is to fish sustainably. This maintains a healthy breeding population of fish, and keeps the price of fish relatively high. The other strategy is to overfish. This reduces the breeding population and fish prices tend to fall. The game is represented in the following table:
  Explain what the Nash equilibrium for this game is and identify the profit each player gets at this solution. Is the Nash equilibrium the best social outcome for this problem?

Quizplus · Accepted Answer

The Answer of Two fishing firms share a common fishery. One strategy available to the firms is to fish sustainably. This maintains a healthy breeding population of fish, and keeps the price of fish relatively high. The other strategy is to overfish. This reduces the breeding population and fish prices tend to fall. The game is represented in the following table:
  Explain what the Nash equilibrium for this game is and identify the profit each player gets at this solution. Is the Nash equilibrium the best social outcome for this problem?

Two Fishing Firms Share a Common Fishery