Consider the following game. Player A and B simultaneously choose to work on either Project 1 (P1) or Project 2 (P2). The payoffs are as follows: if both players choose P1 the payoffs are 6 to A and 2 to B; if A chooses P1 and B chooses P2 the payoffs are 0 to each party; likewise, if A chooses P2 and B chooses P1 the payoffs are 0 to each party; and, finally, if A chooses P2 and B P2 the payoffs are 3 to both players. What are all of the Nash equilibria of this game? a. (P1, P1) b. (P1, P1), (P2, P2) c. (P1, P1), (P2, P2) and (Player A plays P1 with probability 1/3, Player B plays P1 with probability 1/2) d. (P1, P1), (P2, P2) and (Player A plays P1 with probability 3/5, Player B plays P1 with probability 1/3) e. (P1, P2), (P2, P2) and (Player A plays P1 with probability 1/2, Player B plays P1 with probability 2/3)
Question
Consider the following game. Player A and B simultaneously choose to work on either Project 1 (P1) or Project 2 (P2). The payoffs are as follows: if both players choose P1 the payoffs are 6 to A and 2 to B; if A chooses P1 and B chooses P2 the payoffs are 0 to each party; likewise, if A chooses P2 and B chooses P1 the payoffs are 0 to each party; and, finally, if A chooses P2 and B P2 the payoffs are 3 to both players. What are all of the Nash equilibria of this game? a. (P1, P1) b. (P1, P1), (P2, P2) c. (P1, P1), (P2, P2) and (Player A plays P1 with probability 1/3, Player B plays P1 with probability 1/2) d. (P1, P1), (P2, P2) and (Player A plays P1 with probability 3/5, Player B plays P1 with probability 1/3) e. (P1, P2), (P2, P2) and (Player A plays P1 with probability 1/2, Player B plays P1 with probability 2/3)
Solution
The Nash equilibria of this game are (P1, P1) and (P2, P2). This is because these are the only strategy combinations where each player's strategy is the best response to the other player's strategy. In (P1, P1), Player A gets a payoff of 6 and Player B gets a payoff of 2, and neither player can do better by unilaterally changing their strategy. Similarly, in (P2, P2), both players get a payoff of 3, and neither player can do better by unilaterally changing their strategy. Therefore, the answer is b. (P1, P1), (P2, P2).
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