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2. Two car drivers approach an intersection. Each driver can either stop or continue, and payoffs are Stop Continue Stop 1,1 2,1 - ɛ Continue 1-ɛ, 2 0,0 The parameter &, with 0 < < 1, reflects the fact that each driver dislikes being the only one to stop. Find the symmetric Nash equilibrium (equilibria?) of this game. Now suppose drivers are reeducated to feel guilty about choosing Continue. Payoffs are changed as follows:

2. Two car drivers approach an intersection. Each driver can either stop or continue, and payoffs are Stop Continue Stop 1,1 2,1 - ɛ Continue 1-ɛ, 2 0,0 The parameter &, with 0 < < 1, reflects the fact that each driver dislikes being the only one to stop. Find the symmetric Nash equilibrium (equilibria?) of this game. Now suppose drivers are reeducated to feel guilty about choosing Continue. Payoffs are changed as follows:

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter15: Oligopoly And Strategic Behavior
Section: Chapter Questions
Problem 17P
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help please. please be detailed please. i think we also need to draw some diagrams

2. Two car drivers approach an intersection. Each driver can either stop or continue, and payoffs are Stop Continue Stop 1,1 2,1 - E Continue 1 - ɛ, 2 0,0 The parameter ɛ, with 0 < ɛ < 1, reflects the fact that each driver dislikes being the only one to stop. Find the symmetric Nash equilibrium (equilibria?) of this game. Now suppose drivers are reeducated to feel guilty about choosing Continue. Payoffs are changed as follows: Stop 1,1 Stop Continue 2-6,1 -E Continue 1-, 2-8 -6, -6 Payoffs from playing Continue fall by a factor d > 0. Find the symmetric equilibrium of the game. Compare the equilibrium expected payoff across the two games.
Transcribed Image Text:2. Two car drivers approach an intersection. Each driver can either stop or continue, and payoffs are Stop Continue Stop 1,1 2,1 - E Continue 1 - ɛ, 2 0,0 The parameter ɛ, with 0 < ɛ < 1, reflects the fact that each driver dislikes being the only one to stop. Find the symmetric Nash equilibrium (equilibria?) of this game. Now suppose drivers are reeducated to feel guilty about choosing Continue. Payoffs are changed as follows: Stop 1,1 Stop Continue 2-6,1 -E Continue 1-, 2-8 -6, -6 Payoffs from playing Continue fall by a factor d > 0. Find the symmetric equilibrium of the game. Compare the equilibrium expected payoff across the two games.
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