It is Thursday, which means local handymen Val and Earl have to empty the septic tank of a neighbor down the road. Neither wants to be the one to connect the hose and turn on the pump, as there is always a bit of sludge that comes squirting out. Each can either "Stall" hoping that the other does the job, or they can "Do it" themselves. The benefit of stalling is that the other person may do the job, but the cost is that it delays the job and decreases the time they can spend at the local bar drinking beer. The figure below shows the extensive form of this game and the payoffs of Val (V) and Earl (E). Does this game have a Nash equilibrium (may or may not be an SPNE), in which Earl connects the hose and turns on the pump? Do it (5,10) (V,E) Do it (9,4) Do it (5,10) (V,E) Stall E Do it Show Transcribed Text Do it (4,7) (9,4) Stall 1) Yes. There is such a Nash equilibrium. 2) No. There is no such Nash equilibrium. Stall (E) Do it (V (4,7) Do it (6,3) It is Thursday, which means local handymen Val and Earl have to empty the septic tank of a neighbor down the road. Neither wants to be the one to connect the hose and turn on the pump, as there is always a bit of sludge that comes squirting out. Each can either "Stall" hoping that the other does the job, or they can "Do it" themselves. The benefit of stalling is that the other person may do the job, but the cost is that it delays the job and decreases the time they can spend at the local bar drinking beer. The figure below shows the extensive form of this game and the payoffs of Val (V) and Earl (E). Does this game have a Nash equilibrium (may or may not be an SPNE), in which Val connects the hose and turns on the pump? Stall V Stall (E) Do it, Do it (6,3) (1,2) Stall (E Do it (1,2) Stall V 1) Yes. There is such a Nash equilibrium. 2) No. There is no such Nash equilibrium. S Stall Stall V (0,0) Stall (0,0)
It is Thursday, which means local handymen Val and Earl have to empty the septic tank of a neighbor down the road. Neither wants to be the one to connect the hose and turn on the pump, as there is always a bit of sludge that comes squirting out. Each can either "Stall" hoping that the other does the job, or they can "Do it" themselves. The benefit of stalling is that the other person may do the job, but the cost is that it delays the job and decreases the time they can spend at the local bar drinking beer. The figure below shows the extensive form of this game and the payoffs of Val (V) and Earl (E). Does this game have a Nash equilibrium (may or may not be an SPNE), in which Earl connects the hose and turns on the pump? Do it (5,10) (V,E) Do it (9,4) Do it (5,10) (V,E) Stall E Do it Show Transcribed Text Do it (4,7) (9,4) Stall 1) Yes. There is such a Nash equilibrium. 2) No. There is no such Nash equilibrium. Stall (E) Do it (V (4,7) Do it (6,3) It is Thursday, which means local handymen Val and Earl have to empty the septic tank of a neighbor down the road. Neither wants to be the one to connect the hose and turn on the pump, as there is always a bit of sludge that comes squirting out. Each can either "Stall" hoping that the other does the job, or they can "Do it" themselves. The benefit of stalling is that the other person may do the job, but the cost is that it delays the job and decreases the time they can spend at the local bar drinking beer. The figure below shows the extensive form of this game and the payoffs of Val (V) and Earl (E). Does this game have a Nash equilibrium (may or may not be an SPNE), in which Val connects the hose and turns on the pump? Stall V Stall (E) Do it, Do it (6,3) (1,2) Stall (E Do it (1,2) Stall V 1) Yes. There is such a Nash equilibrium. 2) No. There is no such Nash equilibrium. S Stall Stall V (0,0) Stall (0,0)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:It is Thursday, which means local handymen Val and Earl have to empty the septic tank of a neighbor down the road. Neither
wants to be the one to connect the hose and turn on the pump, as there is always a bit of sludge that comes squirting out. Each
can either "Stall" hoping that the other does the job, or they can "Do it" themselves. The benefit of stalling is that the other
person may do the job, but the cost is that it delays the job and decreases the time they can spend at the local bar drinking beer.
The figure below shows the extensive form of this game and the payoffs of Val (V) and Earl (E).
Does this game have a Nash equilibrium (may or may not be an SPNE), in which Earl connects the hose and turns on the pump?
Do it
(5,10)
(V,E)
Do it.
(9,4)
Do it
(5,10)
(V,E)
Stall
E
Do it
Show Transcribed Text
(4,7)
Do it
(9,4)
Stall
E
Stall
V
1) Yes. There is such a Nash equilibriumn.
2)No. There is no such Nash equilibrium.
Do it
Do it.
(4,7)
(6,3)
Stall
It is Thursday, which means local handymen Val and Earl have to empty the septic tank of a neighbor down the road. Neither
wants to be the one to connect the hose and turn on the pump, as there is always a bit of sludge that comes squirting out. Each
can either "Stall" hoping that the other does the job, or they can "Do it" themselves. The benefit of stalling is that the other
person may do the job, but the cost is that it delays the job and decreases the time they can spend at the local bar drinking beer.
The figure below shows the extensive form of this game and the payoffs of Val (V) and Earl (E).
Does this game have a Nash equilibrium (may or may not be an SPNE), in which Val connects the hose and turns on the pump?
V
Stall
Do it,
E
(6,3)
Do it,
(1,2)
Stall
(E
Do it.
(1,2)
Stall
V
1) Yes. There is such a Nash equilibrium.
2) No. There is no such Nash equilibrium.
Stall
Stall
V
c
(0,0)
Stall
(0,0)
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