In the Diner's Dilemma, we said that you could extend the model to include more complicated...
In the Diner's Dilemma, we said that you could extend the model to include more complicated menus. Suppose we added the option where each player can order a drink, as well as their dinner. Suppose their choices are water, which is free, or soda which costs $1. Also suppose that everyone values water at $0, and soda at $1.25. You can assume that this is added to the payo they receive from their meal.
(a) Change this game to include the new option; how many strategies are there now? What are they? Explain.
(b) In the 2-player version, illustrate the new game in a matrix, showing your calculations for the payos.
(c) Solve the 2-player game; what are the Nash equilibria? Explain how they are or are not dierent from the version we say in class.
(d) Explain which assumptions we made in this question are important, and which ones aren't; justify your choices.
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In the Diner's Dilemma, we said that you could extend the model
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