Question

Consider an investment game among 2 players. Each player can either invest, i, or not invest,-i....

Consider an investment game among 2 players. Each player can either invest,

i, or not invest,-i. If a player does not invest, her payoff is 0 regardless of

whether the other invests or not. If a player invests, she gets 1 if the other invests but -1 if at least one of the others does not.

a. What are the pure Nash equilibria?

b. What is the Pareto dominant pure Nash equilibrium?

c. What is the Risk dominant pure Nash equilibrium? Is it the same as the

Pareto Dominant Nash equilibrium you found in b.?

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