-Refer to Figure c.What is the Nash equilibrium in problem 17?
A) Kate squeal, Alice squeal
B) Kate deny, Alice deny
C) Kate squeal, Alice deny
D) Kate deny, Alice squeal

Question

-Refer to Figure c.What is the Nash equilibrium in problem 17?
A) Kate squeal, Alice squeal 
B) Kate deny, Alice deny 
C) Kate squeal, Alice deny 
D) Kate deny, Alice squeal

Quizplus · Accepted Answer

In a Nash equilibrium, each player's strategy is optimal given the other player's strategy. In this scenario, if one prisoner squeals while the other denies, the squealer gets a better outcome (e.g., a reduced sentence). However, if both anticipate this and act rationally in their own self-interest, they both end up squealing, leading to a worse outcome for both than if they had both denied. However, the fear of facing the worst outcome if they deny while the other squeals pushes both to choose to squeal, making "Kate squeal, Alice squeal" the Nash equilibrium.

-Refer to Figure C