Scenario 13.6
Consider the following game. Payoffs are in millions of dollars.
-In the game in Scenario 13.6, what is the Nash equilibrium?
A) The strategy pair associated with -$100, -$1.
B) The strategy pair associated with $2, -$0.5.
C) The strategy pair associated with $1, -$1.
D) The strategy pair associated with -$0.5, -$0.5.
E) There is no Nash equilibrium in pure strategies.

Question

Scenario 13.6
Consider the following game. Payoffs are in millions of dollars. 
-In the game in Scenario 13.6, what is the Nash equilibrium?
A) The strategy pair associated with -$100, -$1. 
B) The strategy pair associated with $2, -$0.5. 
C) The strategy pair associated with $1, -$1. 
D) The strategy pair associated with -$0.5, -$0.5. 
E) There is no Nash equilibrium in pure strategies.

Quizplus · Accepted Answer

In a Nash equilibrium, neither player has an incentive to deviate from their chosen strategy, given the strategy of the other player. In this game, player 1's best response to player 2 playing Defect is to also play Defect, as they will earn $2 million instead of $1 million. Similarly, player 2's best response to player 1 playing Defect is to also play Defect, as they will earn -$0.5 million instead of -$1 million. Therefore, (Defect, Defect) is the Nash equilibrium strategy pair.

Scenario 13.6 Consider the Following Game. Payoffs Are in Millions of Dollars