The payoff matrix below shows the payoffs for Firm A and Firm B,each of whom can either "cooperate" or "cheat." The numbers in parentheses are (payoff for A,payoff for B). $\begin{array}{c}
&\text { Firm B }\
\text { Firm A }&
\begin{array}{l|cr}
& \text { Coop erate } & \text { Cheat } \
\hline \text { Cooperate } & (30,30) & (10, x) \
\text { Cheat } & (x, 10) & (20,20)
\end{array}\end{array}$
-Refer to Table 11- 2.Of the choices provided below,what is the minimum value for x in order for both firms' cheating to be a Nash equilibrium?

Question

The payoff matrix below shows the payoffs for Firm A and Firm B,each of whom can either "cooperate" or "cheat." The numbers in parentheses are (payoff for A,payoff for B). $\begin{array}{c}
&\text { Firm B }\
\text { Firm A }&
\begin{array}{l|cr} 
& \text { Coop erate } & \text { Cheat } \
\hline \text { Cooperate } & (30,30) & (10, x) \
\text { Cheat } & (x, 10) & (20,20)
\end{array}\end{array}$
-Refer to Table 11- 2.Of the choices provided below,what is the minimum value for x in order for both firms' cheating to be a Nash equilibrium?

Quizplus · Accepted Answer

For both firms' cheating to be a Nash equilibrium, neither firm should have an incentive to deviate from cheating. If Firm A cheats and Firm B cheats, Firm A gets 20. If Firm A cheats and Firm B cooperates, Firm A gets x. For cheating to be a Nash equilibrium, x must be less than or equal to 20. Therefore, the minimum value for x is 40, as it is the smallest value greater than 20 among the choices.

The Payoff Matrix Below Shows the Payoffs for Firm a and Firm