(See Problem 1.) Alice and Betsy are playing a game in which each can play either of two strategies, leave or stay. If both play the strategy leave, then each gets a payoff of $400. If both play the strategy stay, then each gets a payoff of $800. If one plays stay and the other plays leave, then the one who plays stay gets a payoff of $C and the one who plays leave gets a payoff of $D. When is the outcome where both play leave a Nash equilibrium? A) Never, since $800 $400. B) When $400 C and D $800 but not when $800 D. C) When D C and C $400. D) Whenever D C.

Question

(See Problem 1.) Alice and Betsy are playing a game in which each can play either of two strategies, leave or stay. If both play the strategy leave, then each gets a payoff of $400. If both play the strategy stay, then each gets a payoff of $800. If one plays stay and the other plays leave, then the one who plays stay gets a payoff of $C and the one who plays leave gets a payoff of $D. When is the outcome where both play leave a Nash equilibrium?
A) Never, since $800 > $400.
B) When $400 > C and D > $800 but not when $800 >D.
C) When D > C and C > $400.
D) Whenever D < $800.
E) Whenever $400 > C.

Quizplus · Accepted Answer

The Answer is E