In the forest, a fire occurs, observed by n >= 2 random walkers. Each walker wishes for firefighters to be informed but prefers someone else to make the call. Assume the following vNM preferences for each walker: Informing the firefighters assigns a value v, while calling each caller incurs a cost c∈(0, v). If firefighters are not informed, the utility is 0. a) Find all pure Nash equilibria. b) Find the symmetric mixed Nash equilibrium. What is the probability in the mixed Nash equilibrium that no one informs the firefighters? Does this latter probability increase or decrease with the number of walkers?
In the forest, a fire occurs, observed by n >= 2 random walkers. Each walker wishes for firefighters to be informed but prefers someone else to make the call. Assume the following vNM preferences for each walker: Informing the firefighters assigns a value v, while calling each caller incurs a cost c∈(0, v). If firefighters are not informed, the utility is 0. a) Find all pure Nash equilibria. b) Find the symmetric mixed Nash equilibrium. What is the probability in the mixed Nash equilibrium that no one informs the firefighters? Does this latter probability increase or decrease with the number of walkers?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In the forest, a fire occurs, observed by n >= 2 random walkers. Each walker wishes for firefighters to be informed but prefers someone else to make the call. Assume the following vNM preferences for each walker: Informing the firefighters assigns a value v, while calling each caller incurs a cost c∈(0, v). If firefighters are not informed, the utility is 0. a) Find all pure Nash equilibria. b) Find the symmetric mixed Nash equilibrium. What is the probability in the mixed Nash equilibrium that no one informs the firefighters? Does this latter probability increase or decrease with the number of walkers?
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