3. Blackadder and Baldrick are rational, self-interested criminals imprisoned in separate cells in a dark medieval dungeon. They face the prisoner's dilemma displayed in the matrix. Assume that Blackadder is willing to pay $1,000 for each year by which he can reduce his sentence below 20 years. A corrupt jailer tells Blackadder that before he decides whether to confess or deny the crime, she can tell him Baldrick's decision. How much is this information worth to Blackadder? (LO2) Blackadder Confess Deny O for Baldrick Confess 5 years for each 20 years for Blackadder Baldrick 20 years for Baldrick Deny 1 year for each O for Blackadder

Microeconomic Theory
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Chapter8: Game Theory
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3. Blackadder and Baldrick are rational, self-interested criminals imprisoned in separate cells in a dark medieval dungeon. They face the
prisoner's dilemma displayed in the matrix.
Assume that Blackadder is willing to pay $1,000 for each year by which he can reduce his sentence below 20 years. A corrupt jailer tells
Blackadder that before he decides whether to confess or deny the crime, she can tell him Baldrick's decision. How much is this
information worth to Blackadder? (LO2)
Blackadder
Confess
Deny
O for Baldrick
Confess
5 years
for each
20 years for Blackadder
Baldrick
20 years for Baldrick
Deny
1 year
for each
O for Blackadder
Transcribed Image Text:3. Blackadder and Baldrick are rational, self-interested criminals imprisoned in separate cells in a dark medieval dungeon. They face the prisoner's dilemma displayed in the matrix. Assume that Blackadder is willing to pay $1,000 for each year by which he can reduce his sentence below 20 years. A corrupt jailer tells Blackadder that before he decides whether to confess or deny the crime, she can tell him Baldrick's decision. How much is this information worth to Blackadder? (LO2) Blackadder Confess Deny O for Baldrick Confess 5 years for each 20 years for Blackadder Baldrick 20 years for Baldrick Deny 1 year for each O for Blackadder
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