a) Model the situation as a strategic game, assuming both 'Ali' and 'Hassan' care only about their own comfort. Find the Nash equilibrium (equilibria) if it exists. Also, does a dominant strategy exist for either 'Ali' or 'Hassan'? b) Now assume that both 'Ali' and 'Hassan' are altruistic, ranking outcomes according to the other person's comfort and, out of politeness, prefer to stand than to sit if the other person stands. Model the situation as a strategic game and find any Nash equilibrium (equilibria) if it exists. Does a dominant strategy exist for either 'Ali' or 'Hassan' with these preferences?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Question-2
The Lahore Metro Bus is crowded for travel during peak hours. During such travel hours two
daily passengers 'Ali' and 'Hassan' enter the Metro. Luckily, two adjacent seats are free in the
bus. Each of them must decide whether to sit or stand. For both, sitting alone is more
comfortable than sitting next to the other person, which in turn is more comfortable than
standing.
(Note: for parts (a) & (b) below consider Ali as 'row player' and Hassan as 'column player').
a) Model the situation as a strategic game, assuming both 'Ali' and 'Hassan' care only about
their own comfort. Find the Nash equilibrium (equilibria) if it exists. Also, does a dominant
strategy exist for either 'Ali' or 'Hassan'?
b) Now assume that both 'Ali' and 'Hassan' are altruistic, ranking outcomes according to the
other person's comfort and, out of politeness, prefer to stand than to sit if the other person
stands. Model the situation as a strategic game and find any Nash equilibrium (equilibria) if it
exists. Does a dominant strategy exist for either 'Ali' or 'Hassan' with these preferences?
Transcribed Image Text:Question-2 The Lahore Metro Bus is crowded for travel during peak hours. During such travel hours two daily passengers 'Ali' and 'Hassan' enter the Metro. Luckily, two adjacent seats are free in the bus. Each of them must decide whether to sit or stand. For both, sitting alone is more comfortable than sitting next to the other person, which in turn is more comfortable than standing. (Note: for parts (a) & (b) below consider Ali as 'row player' and Hassan as 'column player'). a) Model the situation as a strategic game, assuming both 'Ali' and 'Hassan' care only about their own comfort. Find the Nash equilibrium (equilibria) if it exists. Also, does a dominant strategy exist for either 'Ali' or 'Hassan'? b) Now assume that both 'Ali' and 'Hassan' are altruistic, ranking outcomes according to the other person's comfort and, out of politeness, prefer to stand than to sit if the other person stands. Model the situation as a strategic game and find any Nash equilibrium (equilibria) if it exists. Does a dominant strategy exist for either 'Ali' or 'Hassan' with these preferences?
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