6. Eventually, Aron and Nora who we met in the previous problem were able to get together and have now been an item for some time. So long, in fact, that there are issues. Aron is a little insecure, which makes him jealous. Nora is none too pleased about it. When she arranges a girls' night out with some of her friends, Aron is very upset and threatens to break up. So Nora has to decide to go out with her friends or stay home with Aron. If she stays home, she gets a payoff of 0, whereas Aron gets what he wants and a payoff of 2 (perhaps he should be a little more concerned with Nora's happiness). On the other hand, if Nora decides to go out, then Aron must make a choice between breaking up or not. If he breaks up, both he and Nora are miserable and each receives a payoff of -1. If he does not, he gets a payoff of 1 while Nora gets what she wants and a payoff of 2. a) Draw the extensive form of this game. b) Find all Nash equilibria. Explain your answer carefully.

6. Eventually, Aron and Nora who we met in the previous problem were able to get together and have now been an item for some time. So long, in fact, that there are issues. Aron is a little insecure, which makes him jealous. Nora is none too pleased about it. When she arranges a girls' night out with some of her friends, Aron is very upset and threatens to break up. So Nora has to decide to go out with her friends or stay home with Aron. If she stays home, she gets a payoff of 0, whereas Aron gets what he wants and a payoff of 2 (perhaps he should be a little more concerned with Nora's happiness). On the other hand, if Nora decides to go out, then Aron must make a choice between breaking up or not. If he breaks up, both he and Nora are miserable and each receives a payoff of -1. If he does not, he gets a payoff of 1 while Nora gets what she wants and a payoff of 2. a) Draw the extensive form of this game. b) Find all Nash equilibria. Explain your answer carefully.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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