Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![### Nash Equilibrium Table and Identification
#### Payoff Matrix
| | Player 2 |
|------------|---------------------|
| | **Left** | **Right**|
| **Player 1** | | |
| **Up** | **P1: $3** <br> **P2: $7** | **P1: $14** <br> **P2: $5** |
| **Down** | **P1: $6** <br> **P2: $2** | **P1: $1** <br> **P2: $3** |
#### Instructions
In the game shown above, list all of the Nash Equilibrium positions. Please check ALL that apply:
- [ ] (up, left)
- [ ] (up, right)
- [ ] (down, left)
- [ ] (down, right)
- [ ] None
#### Explanation
The payoff matrix above represents a strategic game between two players. Each player can choose a strategy: "Up" or "Down" for Player 1, and "Left" or "Right" for Player 2. The numbers in the cells represent the payoffs for Player 1 (P1) and Player 2 (P2) respectively, given the combination of strategies chosen. For example, if Player 1 chooses "Up" and Player 2 chooses "Left," Player 1 receives $3 and Player 2 receives $7.
A Nash Equilibrium occurs when neither player can increase their payoff by unilaterally changing their strategy. Your task is to determine which strategy pairs, if any, are Nash Equilibria.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faa66dd36-25fa-49f9-afe7-c82b94a375c1%2F08739ca1-1c03-4a01-aa95-890b4164135c%2Ftghsdcf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Nash Equilibrium Table and Identification
#### Payoff Matrix
| | Player 2 |
|------------|---------------------|
| | **Left** | **Right**|
| **Player 1** | | |
| **Up** | **P1: $3** <br> **P2: $7** | **P1: $14** <br> **P2: $5** |
| **Down** | **P1: $6** <br> **P2: $2** | **P1: $1** <br> **P2: $3** |
#### Instructions
In the game shown above, list all of the Nash Equilibrium positions. Please check ALL that apply:
- [ ] (up, left)
- [ ] (up, right)
- [ ] (down, left)
- [ ] (down, right)
- [ ] None
#### Explanation
The payoff matrix above represents a strategic game between two players. Each player can choose a strategy: "Up" or "Down" for Player 1, and "Left" or "Right" for Player 2. The numbers in the cells represent the payoffs for Player 1 (P1) and Player 2 (P2) respectively, given the combination of strategies chosen. For example, if Player 1 chooses "Up" and Player 2 chooses "Left," Player 1 receives $3 and Player 2 receives $7.
A Nash Equilibrium occurs when neither player can increase their payoff by unilaterally changing their strategy. Your task is to determine which strategy pairs, if any, are Nash Equilibria.
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