30. (12 points) Please look at the payoff matrix below which shows the benefits

Question

30. (12 points) Please look at the payoff matrix below which shows the benefits that would accrue to each player in a 2-player, non-sequential, non-repeated game.

                         Player 2                                                                       

Strategy A

Strategy B

Strategy C

40, 40

30, 20

Strategy D

10, 90

70, 80

Player 1

a. Identify the collusive (cooperative) equilibrium

. b. Identify player 1’s secure (maximin) strategy

c. Identify player 2’s maximax strategy

d. Identify the Nash equilibrium

Strategy A

Strategy B

Strategy C

40, 40

30, 20

Strategy D

10, 90

70, 80

Explanation / Answer

a. Identify the collusive (cooperative) equilibrium

  collusive (cooperative) equilibrium is Where Player 1 and 2 plays strategy (Strategy D , Strategy B )

A here both gain more than when they didn't co-operate

. b. Identify player 1’s secure (maximin) strategy

player 1’s secure (maximin) strategy is Strategy C

as it is maximizing his minimum Payoff

c. Identify player 2’s maximax strategy

player 2’s maximax strategy is Strategy A,

as it is maximizing his maximum Payoff

d. Identify the Nash equilibrium

Nash Equlibrium is = (Strategy C , Strategy A) , i.e Player 1 playing Strategy C and player 2 playing strategy A.

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