Question

Q Bob Ann and Bob are fisherman who must choose whether to use a large boat or a small boat to fish off the shores of Newfoundland. The payoffs associated with each set of choices are given at right. 1 Ann and Bob choose simultaneously, then the Nash equilibrium is that O A. both choose large OB. both choose small. OC. Ann chooses large and Bob chooses small OD. Ann chooses small and Bob chooses large Small Boat Large Boat $9,600 $14.400 Small Boat $9,600 $3,600 If Ann chooses first and Bob chooses second, then the equilibrium is that Ann $3,600 $6,000 Large Boat O of O A. Ann chooses small and Bob chooses largo OB. Ann chooses large and Bob chooses small O c. both choose large OD both choose small $14.400 $6.000

Answer 1

Answer-1. Correct option is 'B'

If Ann and Bob choose simultaneously, then the Nash equilibrium is that both choose small. Any outcome that is a best response for both players is a Nash equilibrium. Nash equilibrium is a concept within game theory where the optimal outcome of a game is where there is no incentive to deviate from their initial strategy. Overall, an individual can receive no incremental benefit from changing actions, assuming other players remain constant in their strategies.

Answer-2. Correct option is 'A'

If Ann chooses first and Bob chooses second, then the equilibrium is that Ann chooses small and Bob chooses large.

                           First              Second

For Ann               Small               Large

For Bob               Small             Large