Suppose Matt and Gabe must both choose between two jobs, a safe job that pays $250 per week and a risky job that pays $300 per week. The value of safety to each is $75 per week. Having more income than the other is worth $75 per week to each, and having less income than the other means a $75-per-week reduction in satisfaction. Having the same income as the other means no change in satisfaction. The payoff matrix below summarizes this situation. If Gabe and Matt choose their jobs at the same time, then you can predict that:
A)the equilibrium outcome of this game will not be efficient.
B)the equilibrium outcome of this game will be efficient.
C)there will not be an equilibrium of this game.
D)there will be more than one equilibrium of this game.

Question

Suppose Matt and Gabe must both choose between two jobs, a safe job that pays $250 per week and a risky job that pays $300 per week. The value of safety to each is $75 per week. Having more income than the other is worth $75 per week to each, and having less income than the other means a $75-per-week reduction in satisfaction. Having the same income as the other means no change in satisfaction. The payoff matrix below summarizes this situation.  If Gabe and Matt choose their jobs at the same time, then you can predict that:
A)the equilibrium outcome of this game will not be efficient. 
B)the equilibrium outcome of this game will be efficient. 
C)there will not be an equilibrium of this game. 
D)there will be more than one equilibrium of this game.

Quizplus · Accepted Answer

The Answer of Suppose Matt and Gabe must both choose between two jobs, a safe job that pays $250 per week and a risky job that pays $300 per week. The value of safety to each is $75 per week. Having more income than the other is worth $75 per week to each, and having less income than the other means a $75-per-week reduction in satisfaction. Having the same income as the other means no change in satisfaction. The payoff matrix below summarizes this situation.  If Gabe and Matt choose their jobs at the same time, then you can predict that:
A)the equilibrium outcome of this game will not be efficient. 
B)the equilibrium outcome of this game will be efficient. 
C)there will not be an equilibrium of this game. 
D)there will be more than one equilibrium of this game.

Suppose Matt and Gabe Must Both Choose Between Two Jobs