The following payoff matrix shows outcomes of various strategies that the countries of Home and Foreign can follow to decide to regulate or not regulate pollution. The columns show Foreign's actions, and the rows show Home's actions. The values in the upper right-hand corner of each element give Foreign's net benefits; the values in the lower left-hand corner of each element give Home's net benefits. Net benefits are the environmental benefits from regulation minus the costs associated with installing pollution control equipment. I. Using the payoff matrix, what is likely to happen if there are no international agreements to limit pollution?
II. In the payoff matrix, which element represents a Nash equilibrium?
III. Why is the element you selected in II a Nash equilibrium?

Question

The following payoff matrix shows outcomes of various strategies that the countries of Home and Foreign can follow to decide to regulate or not regulate pollution. The columns show Foreign's actions, and the rows show Home's actions. The values in the upper right-hand corner of each element give Foreign's net benefits; the values in the lower left-hand corner of each element give Home's net benefits. Net benefits are the environmental benefits from regulation minus the costs associated with installing pollution control equipment.  I. Using the payoff matrix, what is likely to happen if there are no international agreements to limit pollution?
II. In the payoff matrix, which element represents a Nash equilibrium?
III. Why is the element you selected in II a Nash equilibrium?

The Following Payoff Matrix Shows Outcomes of Various Strategies That