Will and Grace have adjoining unfenced back yards and each has just adopted a new puppy.Will values a fence between their yards at $250 and Grace values a fence between their yards at $200.The value of the effort required to build the fence is $300,which will be split equally if they both help build the fence.If one of the neighbors begins building the fence the other might or might not come over to help.Therefore,their payoff matrix is $\begin{array}{c}
\quad\quad\quad\quad\quad\quad\quad\quad\text { Will }\
\text { Grace }
\begin{array}{|c|c|c|}
\hline & \text { Build } & \text { Not Build } \
\hline \text { Build } & \text { Grace: } \$ 50 ; \text { Will: } \$ 100 & \text { Grace: } \$ 100 ; \text { Will: } \$ 250 \
\hline \text { Not Build } & \text { Grace: } \$ 200 ; \text { Will: } \$ 50 & \text { Grace: 0; Will: } 0 \
\hline
\end{array}\end{array}$
In the Nash Equilibrium,

Question

Quizplus · Accepted Answer

In the Nash Equilibrium, neither Will nor Grace has an incentive to change their strategy given the other's choice. The payoff matrix shows that both have higher payoffs when they choose "Not Build" compared to "Build," leading to the equilibrium where no fence is built.

Will and Grace Have Adjoining Unfenced Back Yards and Each