Suppose you have been assigned to complete a group project with one of your classmates. Each of you can choose to Shirk or Work. If one or more of you chooses to Work, the project is completed and provides each with extra credit valued at 4 payoff units each. The cost of completing the project is that 6 total units of effort (measured in payoff units) divided equally among all players who choose to Work and this is subtracted from their payoff. If both of you Shirk, then neither of you have to expend any effort but the project is not completed, giving each a payoff of 0. The teacher can only tell whether the project is completed and not which students contributed to it. What is the dominant strategy for you?
A)Work
B)Shirk
C)There is no dominant strategy.
D)Work if your friend also works.

Question

Quizplus · Accepted Answer

Choosing to Shirk is the dominant strategy because it guarantees avoiding the cost of effort (6 units divided among workers) while still potentially benefiting from the project being completed if the other person chooses to Work. Working involves a cost that could result in a net loss (2 units if both work, since the payoff is 4 units each minus the 3 units of effort each), whereas Shirking avoids any cost and still allows for the possibility of gaining the benefit if the other person works.

Suppose You Have Been Assigned to Complete a Group Project