Question: 1) There are two players. Each player is given an unmarked envelope and asked to put in it either nothing or $300 of his


1) There are two players. Each player is given an unmarked envelope

1) There are two players. Each player is given an unmarked envelope and asked to put in it either nothing or $300 of his own money or $600 of his own money. A referee collects the envelopes, opens them, gathers all the money, then adds 50% of that amount (using his own money) and divides the total into two equal parts which he then distributes to the players. (a) Suppose that Player 1 has some animosity towards the referee and ranks the outcomes in terms of how much money the referee loses (the more, the better), while Player 2 is selfish and greedy and ranks the outcomes in terms of her own net gain. Represent the simultaneous game with a payoff matrix. (b) Find the Nash equilibria of the game.

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