Suppose that the St Clair river, which flows along the border between Ontario and Michigan, becomes polluted and needs to be cleaned. The American and Canadian governments need to make a decision on whether to clean the river or not. They must make this decision simultaneously. If both countries invest in cleaning the river, they each get a payoff of 871. If one country invests in cleaning the river, but the other one doesn't, the country that spends the money on the cleanup gets a payoff of 161, while the other country gets to enjoy the benefits of the clean river without having to spend any money, and therefore gets a payoff of 1159. If neither country invests in cleaning the river, they must both deal with the consequences of the pollution, and they each get a payoff of -639. Suppose that the U.S. and Canada are again making decisions simultaneously. Find the Nash Equilibrium in mixed strategies. In the mixed strategy Nash Equilibrium, what is the probability that Canada invests in cleaning the river? (Write the probability as a number between 0 and 1, rounded to the second decimal point, e.g. 0.37.) Answer: In the mixed strategy Nash Equilibrium, what is the probability that the U.S. invests in cleaning the river? Answer:
Suppose that the St Clair river, which flows along the border between Ontario and Michigan, becomes polluted and needs to be cleaned. The American and Canadian governments need to make a decision on whether to clean the river or not. They must make this decision simultaneously. If both countries invest in cleaning the river, they each get a payoff of 871. If one country invests in cleaning the river, but the other one doesn't, the country that spends the money on the cleanup gets a payoff of 161, while the other country gets to enjoy the benefits of the clean river without having to spend any money, and therefore gets a payoff of 1159. If neither country invests in cleaning the river, they must both deal with the consequences of the pollution, and they each get a payoff of -639. Suppose that the U.S. and Canada are again making decisions simultaneously. Find the Nash Equilibrium in mixed strategies. In the mixed strategy Nash Equilibrium, what is the probability that Canada invests in cleaning the river? (Write the probability as a number between 0 and 1, rounded to the second decimal point, e.g. 0.37.) Answer: In the mixed strategy Nash Equilibrium, what is the probability that the U.S. invests in cleaning the river? Answer:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose that the St Clair river, which flows along the border between Ontario and Michigan,
becomes polluted and needs to be cleaned. The American and Canadian governments need to
make a decision on whether to clean the river or not. They must make this decision
simultaneously. If both countries invest in cleaning the river, they each get a payoff of 871. If one
country invests in cleaning the river, but the other one doesn't, the country that spends the
money on the cleanup gets a payoff of 161, while the other country gets to enjoy the benefits of
the clean river without having to spend any money, and therefore gets a payoff of 1159. If neither
country invests in cleaning the river, they must both deal with the consequences of the pollution,
and they each get a payoff of -639.
Suppose that the U.S. and Canada are again making decisions simultaneously. Find the Nash
Equilibrium in mixed strategies.
In the mixed strategy Nash Equilibrium, what is the probability that Canada invests in cleaning the
river?
(Write the probability as a number between 0 and 1, rounded to the second decimal point, e.g. 0.37.)
Answer:
In the mixed strategy Nash Equilibrium, what is the probability that the U.S. invests in cleaning the
river?
Answer:
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