You and a classmate are assigned a project on which you will receive one combined grade. You each want to receive a good grade, but you also want to avoid hard work. In particular, here is the situation:
- If both of you work hard, you both get an A, which gives each of you 40 units of happiness.
- If only one of you works hard, you both get a B, which gives each of you 30 units of happiness.
- If neither of you works hard, you both get a D, which gives each of you 10 units of happiness.
- Working hard costs 25 units of happiness.
(a) Fill in the payoffs in the following decision box:
(b) What is likely the outcome? Explain.
(c) If you get this classmate as your partner on a series of projects throughout the years, rather than only once, how might that change the outcome you predicted in part b?
(d) Another classmate cares more about good grades: He gets 50 units of happiness for a B, and 80 units of happiness for an A. If this classmate were your partner (but your preferences were unchanged), how would your answers to part A and part B change? Which of these two classmates would you prefer as a partner? Would he also want you as a partner?

  • CreatedAugust 05, 2013
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