(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 $300. If both play the strategy stay, then each gets a payoff of $600. 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) When $300 C and D $600 but not when $600 D. B) Never, since $600 $300. C) Whenever D C and C $300. E) Whenever $300 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 $300. If both play the strategy stay, then each gets a payoff of $600. 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) When $300 > C and D > $600 but not when $600 >D.
B) Never, since $600 > $300.
C) Whenever D < $600.
D) When D > C and C > $300.
E) Whenever $300 > C.

Quizplus · Accepted Answer

The Answer is E