-Consider the noncooperative oil-drilling game depicted in Figure 5.4 in which payoffs are in millions of dollars. If this game is played five times, the Nash equilibrium strategy profile in the first round is:
A) {Narrow, Narrow}.
B) {Narrow, Wide}.
C) {Wide, Narrow}.
D) {Wide, Wide}.

Question

-Consider the noncooperative oil-drilling game depicted in Figure 5.4 in which payoffs are in millions of dollars. If this game is played five times, the Nash equilibrium strategy profile in the first round is:
A) {Narrow, Narrow}. 
B) {Narrow, Wide}. 
C) {Wide, Narrow}. 
D) {Wide, Wide}.

Quizplus · Accepted Answer

In a noncooperative oil-drilling game, players aim to maximize their own payoff without cooperation. The Nash equilibrium is a strategy profile where no player can benefit by changing their strategy while the other players keep theirs unchanged. {Wide, Wide} is typically the Nash equilibrium in such games because each player, acting independently, prefers to choose the strategy that maximizes their own payoff, assuming the other player's strategy is fixed. In this context, choosing "Wide" would be a dominant strategy for both players, leading to the Nash equilibrium of {Wide, Wide}.

-Consider the Noncooperative Oil-Drilling Game Depicted in Figure 5