Question: Question 1 Recall our discussion about freeriding behavior. Consider the following game: It is flu season, and two roommates must decide on whether or

Question 1 Recall our discussion about freeriding behavior. Consider the following game:



Question 1 Recall our discussion about freeriding behavior. Consider the following game: It is flu season, and two roommates must decide on whether or not to get a flu shot, which costs K dollars. Let S (for example, S = 10, etc.) represent the benefit of not getting sick. That is, if a player gets sick, they incur a cost -S of getting sick, and if they don't, they receive a benefit of S. Now, if neither roommate pays for the shot, they both get sick. If Roommate 1 buys the shot but Roomate 2 does not, Roomate 1 does not get sick. However, neither does Roommate 2, because Roomate 1 obtained the shot. The opposite scenario is true of Roomate 2 buys the shot but Roomate 2 does not. Finally, both have the option of buying the shot and not getting sick. Suppose that S - K > 0, and answer the following questions: 1. Write the game in a payoff table/matrix. 2. Write each player's best response function. 3. Solve for the Nash equilibria. 4. Describe the situation in words and comment on the possible implications of the Nash equilibria in this game.

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To solve this problem lets go through each part step by step 1 Payoff Matrix Lets define the strategies C Choosing to get the flu shot NC Choosing not ... View full answer

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