A massive wildfire devastated southern California. Rumor has it that three friends (Adam, Bob and Carl)...
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A massive wildfire devastated southern California. Rumor has it that three friends (Adam, Bob and Carl) were the ones who first saw a little fire while they were hiking. Yet, none of them called the firefighters and the little fire eventually became a mega-fire. Let's explore this through the lens of game theory. Each friend can do one of the following: call the fireghters or not, and we assume they decide simultaneously. If no one calls, the little fire becomes a big deal and each of the friends gets a payoff of 0. If anyone calls, the small fire is put down and each person who calls gets a payoff of 1/3 (the benefit of having the fire put down minus the cost of calling) while others (those who didn't call) get a payoff of 1 (enjoying the benefit without paying the cost). (a) (1 point) Find all pure-strategy Nash equilibria. Explain. (b) (1 point) Find the symmetric mixed-strategy Nash equilibrium, where each friend calls with the same probability and aims at maximizing its expected payoff. Explain.¹ A massive wildfire devastated southern California. Rumor has it that three friends (Adam, Bob and Carl) were the ones who first saw a little fire while they were hiking. Yet, none of them called the firefighters and the little fire eventually became a mega-fire. Let's explore this through the lens of game theory. Each friend can do one of the following: call the fireghters or not, and we assume they decide simultaneously. If no one calls, the little fire becomes a big deal and each of the friends gets a payoff of 0. If anyone calls, the small fire is put down and each person who calls gets a payoff of 1/3 (the benefit of having the fire put down minus the cost of calling) while others (those who didn't call) get a payoff of 1 (enjoying the benefit without paying the cost). (a) (1 point) Find all pure-strategy Nash equilibria. Explain. (b) (1 point) Find the symmetric mixed-strategy Nash equilibrium, where each friend calls with the same probability and aims at maximizing its expected payoff. Explain.¹
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Game Analysis Wildfire and Calling the Firefighters a PureStrategy Nash Equilibria There are no purestrategy Nash equilibria in this game Heres why If ... View the full answer
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
Posted Date:
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