Question

1 pts Question 8 U Player 2 L R U 2.0 2,1 Player 1 D 3,1 1,2 The above figure shows the payoff matrix for two players, Player 1 and Player 2. Player 1's payoff is listed first in each cell. A Nash equilibrium of this game is that Player 1 chooses and Player 2 chooses L. Player 1 chooses and Player 2 chooses R. Player 1 chooses and Player 2 chooses L. Player 1 chooses U and Player 2 chooses R.

Answer 1

8. As player-1 chooses strategy U and player-2 chooses strategy L, player-1's payoff would be 2 and if player-2 chooses strategy R, player-1's payoff is also 2. On the other hand, if player-1 chooses strategy D and player-2 chooses strategy L, player-1's payoff would be 3 and his or her payoff would be 1 if player-2 chooses strategy R. Therefore, by choosing strategy D, there is a possibility that player-1 can earn the lowest possible payoff of 1 from all the possible payoff options depending on the corresponding strategy chosen by player-2, compared to strategy U which guarantees him or her payoff of 2 regardless of the strategy chosen by player-2. Hence, as a rational and risk-aversive indivdual or entity, player-1 is better off chossing strategy U on the basis of the strategy chosen by player-2 and the respective payoffs. On the other hand, as player-2 chooses strategy L and player-1 chooses strategy U then player-2 gets a payoff or 0 or gets nothing and if player-1 chooses strategy D then player-2 gets a payoff of 1. Now, if player-2 chooses strategy R and player-1 chooses strategy U , then player-2 gets a payoff of 1 and if player-1 selects strategy D then player-2 gets a payoff of 2. Thus, note that there is a risk or possibility that player-2 can earn the lowest payoff of 0 among all the possible payoffs by choosing strategy L, considering that player-1 chooses strategy U. On the other hand, by choosing strategy R, player-2's possible payoffs are 1 and 2 as player-1 chooses strategy U and D respectively, which implies that the possible payoffs of 0 and 1 for player-2 are lower compared to choosing strategy R with possible payoffs of 1 and 2 contingent on the corresponding strategy chosen by player-1. Therefore, player-2 is better off choosing strategy R. Hence, the Nash equilibrium of this game would be player-1 choosing strategy U and player-2 choosing strategy R with the respective payoffs (2,1). Thus, the answer, in this case, would be the last or the 4th option given in the answer choices or options or Palyer-1 chooses U and Player-2 chooses R.