1. Alan and Beatrice are students who are suspected of colluding on their assignment. Theexaminers are going to interview each of them individually, in separate rooms. Alan and Beatricemust each choose whether to Deny or Confess. The following diagram shows Alan's preferencesover the possible outcomes when he is completely selfish (red, vertical lines) compared to when heis somewhat altruistic (green curves). Based on this information, determine whether each of thefollowing statements is true or false.80-(D, C)70-Beatrice's payoff60-5040-302010-10 10(D, D) Both deny(D, C) = Alan denies and Beatrice confesses(C, D) - Alan confesses and Beatrice denies(C, C)= Both confess11(C, C)(D. D)20 30 40 50Alan's payoff(C, D) -60 70 80(a) When Alan is completely selfish, denying is his dominant strategy.(b) When Alan is somewhat altruistic, denying is his dominant strategy.(c) When Alan is completely selfish and Beatrice is somewhat altruistic, confessing is Alan'sdominant strategy.(d) When Alan and Beatrice are both completely selfish, (C, D) is the dominant strategyequilibrium as it is on the highest indifference curve for Alan.

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1. Alan and Beatrice are students who are suspected of colluding on their assignment. The examiners are going to interview each of them individually, in separate rooms. Alan and Beatrice must each choose whether to Deny or Confess. The following diagram shows Alan's preferences over the possible outcomes when he is completely selfish (red, vertical lines) compared to when he is somewhat altruistic (green curves). Based on this information, determine whether each of the following statements is true or false. 80- (D, C) 70- 60- Beatrice's payoff 50 40- 30- 20 10 0 0 10 (D.D) - Both deny (D, C)-Alan denies and Beatrice confesses (C, D)-Alan confesses and Beatrice denies (CC)-Both confess (C,C) (D.D) (C,D) 20 30 40 50 60 70 80 Alan's payoff (a) When Alan is completely selfish, denying is his dominant strategy. (b) When Alan is somewhat altruistic, denying is his dominant strategy. (c) When Alan is completely selfish and Beatrice is somewhat altruistic, confessing is Alan's dominant strategy. (d) When Alan and Beatrice are both completely selfish, (C, D) is the dominant strategy equilibrium as it is on the highest indifference curve for Alan.

1. Alan and Beatrice are students who are suspected of colluding on their assignment. The examiners are going to interview each of them individually, in separate rooms. Alan and Beatrice must each choose whether to Deny or Confess. The following diagram shows Alan's preferences over the possible outcomes when he is completely selfish (red, vertical lines) compared to when he is somewhat altruistic (green curves). Based on this information, determine whether each of the following statements is true or false. 80- (D, C) 70- 60- Beatrice's payoff 50 40- 30- 20 10 0 0 10 (D.D) - Both deny (D, C)-Alan denies and Beatrice confesses (C, D)-Alan confesses and Beatrice denies (CC)-Both confess (C,C) (D.D) (C,D) 20 30 40 50 60 70 80 Alan's payoff (a) When Alan is completely selfish, denying is his dominant strategy. (b) When Alan is somewhat altruistic, denying is his dominant strategy. (c) When Alan is completely selfish and Beatrice is somewhat altruistic, confessing is Alan's dominant strategy. (d) When Alan and Beatrice are both completely selfish, (C, D) is the dominant strategy equilibrium as it is on the highest indifference curve for Alan.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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