Consider the following game where two players have to decide if they want to buy a movie ticket or a baseball ticket. They have the highest payoffs when they both buy tickets to the same activity, but must decide simultaneously what to buy without knowing what the other person will do. a. Does either player have a dominant strategy? b. How many equilibria does this game have? c. Is this an example of a prisoner’s dilemma? Explain. d. What will be the outcome if your friend buys their ticket first and you can observe their choice?
Consider the following game where two players have to decide if they want to buy a movie ticket or a baseball ticket. They have the highest payoffs when they both buy tickets to the same activity, but must decide simultaneously what to buy without knowing what the other person will do. a. Does either player have a dominant strategy? b. How many equilibria does this game have? c. Is this an example of a prisoner’s dilemma? Explain. d. What will be the outcome if your friend buys their ticket first and you can observe their choice?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider the following game where two players have to decide if they want to buy a movie ticket or a baseball ticket. They have the highest payoffs when they both buy tickets to the same activity, but must decide simultaneously what to buy without knowing what the other person will do.
a. Does either player have a dominant strategy?
b. How many equilibria does this game have?
c. Is this an example of a prisoner’s dilemma? Explain.
d. What will be the outcome if your friend buys their ticket first and you can observe their choice?
Transcribed Image Text:### Decision Matrix for Movie or Baseball Game
This decision matrix is designed to analyze choices between watching a movie or attending a baseball game, with you and a friend as decision-makers. The table is divided into rows and columns representing the different choices available to you and your friend, respectively.
#### Matrix Breakdown:
- **Columns**:
- **Movie**: Represents your choice to watch a movie.
- **Baseball**: Represents your choice to go to a baseball game.
- **Rows**:
- **Movie**: Represents your friend's choice to watch a movie.
- **Baseball**: Represents your friend's choice to attend a baseball game.
#### Payoff Values:
- **(Movie, Movie):** (3, 2)
- If both you and your friend choose to watch a movie, you receive a payoff of 3, and your friend receives a payoff of 2.
- **(Movie, Baseball):** (0, 1)
- If you choose to watch a movie but your friend chooses baseball, you receive a payoff of 0, and your friend receives a payoff of 1.
- **(Baseball, Movie):** (1, 0)
- If you choose baseball but your friend chooses to watch a movie, you receive a payoff of 1, and your friend receives a payoff of 0.
- **(Baseball, Baseball):** (2, 3)
- If both you and your friend choose to attend a baseball game, you receive a payoff of 2, and your friend receives a payoff of 3.
### Analysis:
This matrix helps visualize the potential outcomes and payoffs for each combination of choices between two friends deciding between leisure activities. It can be used to predict behavior or strategize in similar decision-making scenarios.
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Step 1: Define Nash equilibrium.
VIEWStep 2: Explain does either player have a dominant strategy?
VIEWStep 3: Explain How many equilibria does this game have?
VIEWStep 4: Explain is this an example of a prisoner’s dilemma?
VIEWStep 5: Explain the outcome if your friend buys their ticket first and you can observe their choice.
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