Suppose that you and a friend play a \"matching pennies\" game in which each of

Question

Suppose that you and a friend play a "matching pennies" game in which each of you uncovers a penny. If both pennies show heads or both show tails, you keep both. If one shows heads and the other shows tails, your friend keeps them. The payoff matrix is shown to the right. What, if any, is the pure-strategy Nash equilibrium to this game? OA. The pure-strategy Nash equilibrium is for you randomly to choose heads with probability 0.5 and tails Heads Tails with probability 0.5 and for your friend randomly to choose heads with probability 0.5 and tails with probability 0.5. The pure-strategy Nash equilibrium is for both you and your friend to choose heads. This game has no pure-strategy Nash equilibria. The pure-strategy Nash equilibrium is for both you and your friend to choose tails. The two pure-strategy Nash equilibria are for you to choose heads and your friend to choose tails and for you to choose tails and for your friend to choose heads. 0 cents 2 cents B. C. 0 D. 0 E. Heads 2 cents 0 cents You 2 cents 0 cents 0 cents 2 cents

Explanation / Answer

C. This game has no pure-strategy Nash equilibrium.

There is no dominant strategy of You and Your friend because either of you and your friend are not able to earn a definite payoff by choosing Heads or Tails.

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