Question: Question 10 - Game Theory: You and a classmate are assigned a project on which you will receive one combined grade. You each want to

Question 10 - Game Theory: You and a classmate

Question 10 - Game Theory: 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: a. If both of you work hard, you both get an A, which gives each of you 40 units of happiness. b. 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. d. Working hard costs 25 units of happiness You get a) Fill in the pay offs in Your Decision the following decision box by finding your Work Hard Do Not Work / Help "net happiness" - the You get 15 units of units of happiness you receive Work happiness happiness from the grade minus Hard Classmate gets - Classmate gets 5 the cost of working Classmate's units of happiness units of happiness hard if in fact you do! Decision You get units units of Some answers are Do Not of happiness happiness already filled in... Work/ Classmate gets 30 Classmate gets 10 Help b) Do you have a units of happiness units of happiness "dominant strategy" that is, will you either always work or always not work, regardless of what your classmate does? You get c) What is the likely outcome (Nash equilibrium)? Explain your answer. d) If you get this classmate as your partner on a series of projects throughout the year, rather than only once, how might that change the outcome you predicted in part "C"? e) Another one of your With harder working Your Decision classmate cares more partner Work Hard Do Not Work / Help about good grades: he gets 50 units of You get units of You get units of happiness for a B and Work happiness happiness 80 units of happiness Hard Classmate gets 55 Classmate gets 25 from an A. If this other Classmate's units of happiness units of happiness classmate were your Decision You get 5 units of You get units of partner (but your Do Not happiness happiness preferences were Work/ Classmate gets Classmate gets unchanged), how Help units of happiness units of happiness would your answers to parts (a) and (b) change? Which of the two classmates would you prefer as a partner? Would he also want you as a partner

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