Answered: Sadaam Hussein is deciding where to…

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter1: The Economic Approach

Section: Chapter Questions

Problem 10CQ

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Question

Sadaam Hussein is deciding where to hide his weapons of mass destruction
(WMD), while the United Nations is deciding where to look for them. The
payoff to Hussein from successfully hiding WMD is 5 and from having
them found is 2. For the UN, the payoff to finding WMD is 9 and from not
finding them is 4. Hussein can hide them in facility X, Y, or Z. The UN
inspection team has to decide which facilities to check. Because the inspectors are limited in terms of time and personnel, they cannot check all
facilities.
a. Suppose the UN has two pure strategies: It can either inspect facilities
X and Y (both of which are geographically close to each other) or
inspect facility Z. Find a Nash equilibrium in mixed strategies.
b. Suppose the UN can inspect any two facilities, so that it has three pure
strategies. The UN can inspect X and Y, X and Z, or Y and Z. Find a
Nash equilibrium in mixed strategies.

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