2 Boudreaux and Thibodeaux are at it again. Relative to land is better suited to

Question

2 Boudreaux and Thibodeaux are at it again. Relative to land is better suited to growing sugarcane, while Thibodeaux's land is best suited to growing rice. Both plots of land, however, can produce rice or sugarcane. Below is a standard game theory / payoff matrix for each farmer, depending on what they choose to grow the each others farm, Boudreauxs Payoff matrix: Thibodeaux Rice Rice s1m $2m Boudreaux Sugarcane $5m $5m $2m $1m Assume Boudreaux and Thibodeaux make their decisions independently, without coordinating. Do either Boudreaux or Thibodeaux have a dominant strategy? In game theory, if everyone is playing their best response to the strategies of everyone else, these strategies are termed a "Nash equilibrium. Nash equilibrium can occur where Boudreaux's strategy is best in relation to what Thibodeaux chooses and vice versa. Assuming Boudreaux and Thibodeaux make their decisions independently, without coordinating, is there a Nash equilibrium for this game? Is there more than one Nash equilibrium? What is the likely outcome of this game. Assume Boudreaux and Thibodeaux make their decisions independently, without coordinating. Relative to Boudreaux's land, Thibodeaux's land is better suited to growing rice. However, the Thibodeaux family have been sugarcane farmers for seven generations. Each year they plant sugarcane. In response to this, Boudreaux grows rice. Given the curren have an incentive to switch the crop they are growing? a. c. doe s either Boudreaux or T

Explanation / Answer

a. The Boudreaux has a dominant strategy as we compared with the Thibodeaux. As they work independently without coordinating each other so that the prices of rice and sugarcane are more dominant is in Boudreaux as we compared with the Thibodeaux.

b. Yes, there would be a nash equilibrium as they played independently and each and everyone get the favourable response so that there is a likely chance of getting one or more nash equilibrium as we say that the payoff matrix of sugarcane and rice between the Boudreaux and Thibodeaux.

c. Although the family of Thibodeaux have been farmer of sugarcane for several generations so that we can say that it can be switch to sugarcane rather than the rice but on the other hand as they work independently so that it should kept in mind that if Thibodeaux will switch it might or might not be possible that it will grow that much amount of profit as it will gain through rice.

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