You have to do a two-student project in a class. Assume that you and your partne

Question

You have to do a two-student project in a class. Assume that you and your partner are both interested in maximizing your grade, but you are both very busy and get more happiness if you can get a good grade with less work. The strategy choices for you and your partner and the resulting payoffs are described in the figure below. What is your dominant strategy? What is your partner's dominant strategy? Explain. What is the Nash equilibrium in this situation? Explain. If you and your partner are required to work together on a number of projects throughout the semester, how might this change the outcome you predicted in parts (a) and (b)?

Explanation / Answer

A dominanting strategy cannot be found till we don't know the utility function. In other words we know the trade-off price between hapiness and higher grade.

If other person works hard, you are better off working less hard, as you will still get A but your happiness is high.

But if other person slacks, then you can work extra hard and get A or slack off and get a B.

So No Nash Equilibrium can be computed till we don't have the trade-off information.

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