Question: (A) and (O) live in a remote area . A is sitting at home one night when there is a sudden power outage, and he
(A) and (O) live in a remote area . A is sitting at home one night when there is a sudden power outage, and he can see that the lights are out in O's house as well. The electric company will fix the problem, provided that somebody calls to let them know about the outage. Each agent (A or O) benefits seven units of payoff if the power comes back. But making a phone call costs three units. Each of the two agents, A and O can choose either to Call (C) or Don't Call (D). If nobody calls the electric company there is no power restored, and each agent's payoff is 0.
1) Formulate the above problem as a Normal form game.
2) find all pure and mixed strategy nash equilibria in the game
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
