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). $$\begin{array}{l}
\begin{array} { | l | l | l | l | }
\hline & & \text { Firm B } & \
\hline & & \text { Cooper ate } & \text { Cheat } \
\hline \text { Firm A } & \text { Cooperate } & ( 30,30 ) & ( 10 , x ) \
\hline & \text { Cheat } & ( x , 10 ) & ( 20,20 ) \
\hline
\end{array}\
\text { TABLE 11- } 2
\end{array}$$
-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). $$\begin{array}{l}
\begin{array} { | l | l | l | l | } 
\hline & & \text { Firm B } & \
\hline & & \text { Cooper ate } & \text { Cheat } \
\hline \text { Firm A } & \text { Cooperate } & ( 30,30 ) & ( 10 , x ) \
\hline & \text { Cheat } & ( x , 10 ) & ( 20,20 ) \
\hline
\end{array}\
\text { TABLE 11- } 2
\end{array}$$
-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 cooperates, Firm A gets x. If Firm A cooperates and Firm B cheats, Firm A gets 10. For cheating to be a Nash equilibrium, x must be at least 20, the payoff when both cheat. The minimum value given that satisfies this condition is 40.

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