Scenario: Two colleagues-Mathew and Peter-have successfully completed a project, and their employer has decided to reward them in a unique way. Each of them is taken to a separate room and asked to choose whether the other colleague is a good teammate or a bad teammate. They are told that if both of them choose "bad," they will not get any reward. If both of them choose "good," they will get $5,000 each. If one chooses "good" while the other chooses "bad," the one who chooses "bad" will get $10,000 and the one who chooses "good" will not get anything.
-Refer to the scenario above.If the players have to pay a fairness penalty of $7,000,________.

Question

Quizplus · Accepted Answer

Choosing "bad" is not rational, as it leads to both of them losing the reward. Choosing "good" is the safest option, as it leads to both of them receiving some reward, regardless of the other's choice. Paying a fairness penalty of $7,000 should not affect their decision, as it does not change the distribution of rewards or the potential outcomes of their choices. Therefore, the best choice is for both Mathew and Peter to choose "good."

Scenario: Two Colleagues-Mathew and Peter-Have Successfully Completed a Project, and Their