Question

Refer to the Figure 4 matrix of payoffs for honest dealing by the seller and trusting behavior by the buyer. Figure BUYER Trust Doesn't Trust Honest (150, 150) (0, 200) Dishonest (250, -50) (50, 50) SELLER From the information in the matrix, we can deduce Select one: O a. The seller has an incentive to be dishonest toward the buyer while the buyer has an incentive not to trust the seller. N O b. The seller has an incentive to be dishonest toward the buyer while the buyer has an incentive to trust the seller. O c. The seller has an incentive to be honest toward the buyer while the buyer has an incentive not to trust the seller. O d. None of the above.

Answer 1

a) "B"

The seller in the market has an inventive in the market to trust the buyer and the buyer has an inventive to be dishonest. the answer is "B".

b) "A"

this will create a shortage in the market.