Your English professor has announced the following grading policy: For each essay, the highest score in the class will be entered as a 100%; all other scores will be entered as the percent of that top score. For example, if the highest essay is a 50 out of 100, it will be counted as a perfect paper, and essays with a score of 40 out of 100 will be entered as an 80%. The final grade for the course will be determined using these adjusted percentages, with 90% and above an A, 80% and above a B, 70% and above a C and below 70% not passing. The students all get together and decide not to work hard on the next paper because if nobody does well, they will all do okay. This plan results in a Nash Equilibrium. A.) is a solid commitment device, and thus stable. B.) will be unstable because there is an incentive to break the agreement. C.) will be stable because there are no incentives to deviate. D.) requires everyone to follow their dominant strategy.
Your English professor has announced the following grading policy: For each essay, the highest score in the class will be entered as a 100%; all other scores will be entered as the percent of that top score. For example, if the highest essay is a 50 out of 100, it will be counted as a perfect paper, and essays with a score of 40 out of 100 will be entered as an 80%. The final grade for the course will be determined using these adjusted percentages, with 90% and above an A, 80% and above a B, 70% and above a C and below 70% not passing.
The students all get together and decide not to work hard on the next paper because if nobody does well, they will all do okay. This plan
results in a Nash Equilibrium.
A.) is a solid commitment device, and thus stable.
B.) will be unstable because there is an incentive to break the agreement.
C.) will be stable because there are no incentives to deviate.
D.) requires everyone to follow their dominant strategy.
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