Michigan (MI) and Wisconsin (WI) both border Lake Michigan. Both states pollute Lake Michigan and both states suffer the consequences of the pollution. However, the two states face a prisoner’s dilemma of the sort studied in Chapter 12. Each country must decide whether to protect or not to protect Lake Michigan from pollution. The payoffs from the choices are shown in the table below. Michigan ProtectNot Protect WisconsinProtectWI gains 500MI gains 500WI loses 300MI gains 600Not ProtectWI gains 600MI loses 300WI loses 250MI loses 250 From the table, we know that if Wisconsin chooses to protect the lake, Michigan will choose to ________________ the lake. If Wisconsin chooses to not protect the lake, Michigan will choose to __________________ the lakeQuestion 1 options: protect;protect not protect;protect protect;not protect not protect;not protect

Each player works to maximize his payoff depending on the actions of other player. He choses the action that gives him higher payoff.When Wisconsin chooses to protect the lake, Michigan can either earn $500 by choosing to protect or $600 by choosing to not protect. He earns a higher payoff by choosing to not protect. When Wisconsin chooses to not protect, Michigan can either lose $-300 by choosing to protect or lose $-250 by choosing to not protect. He incurs a lower loss by choosing not to protect. Correct : not protect; not protect

Answered: Michigan (MI) and Wisconsin (WI) both…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Michigan (MI) and Wisconsin (WI) both border Lake Michigan. Both states pollute Lake Michigan and both states suffer the consequences of the pollution. However, the two states face a prisoner’s dilemma of the sort studied in Chapter 12. Each country must decide whether to protect or not to protect Lake Michigan from pollution. The payoffs from the choices are shown in the table below.

		Michigan
		*Protect*	*Not Protect*
Wisconsin	*Protect*	WI gains 500 MI gains 500	WI loses 300 MI gains 600
*Not Protect*	WI gains 600 MI loses 300	WI loses 250 MI loses 250

From the table, we know that if Wisconsin chooses to protect the lake, Michigan will choose to ________________ the lake. If Wisconsin chooses to not protect the lake, Michigan will choose to __________________ the lake

Question 1 options:

	protect;protect
	not protect;protect
	protect;not protect
	not protect;not protect

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