Question 4: An airline loses two suitcases belonging to two different travelers. Both suit- cases happen...

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Question 4: An airline loses two suitcases belonging to two different travelers. Both suit- cases happen to be identical and therefore have equal replacement value. An airline manager tasked to settle the claims of both travelers explains that the airline is liable for a maximum of $100 per suitcase, and in order to determine an honest appraised value of the suitcases the manager separates both travelers so they can't confer, and asks them to write down the amount of their value at no less than $2 and no larger than $100. He also tells them that if both write down the same number, he will treat that number as the true dollar value of both suitcases and reimburse both travelers that amount. However, if one writes down a smaller number than the other, this smaller number will be taken as the true dollar value, and both travelers will receive that amount along with a bonus/malus: $2 extra will be paid to the traveler who wrote down the lower value and a $2 deduction will be taken from the person who wrote down the higher amount. Describe the set of strategies of both players and find all the pure strategy Nash equilibria of the game. Restrict yourself to integer numbers only. Question 4: An airline loses two suitcases belonging to two different travelers. Both suit- cases happen to be identical and therefore have equal replacement value. An airline manager tasked to settle the claims of both travelers explains that the airline is liable for a maximum of $100 per suitcase, and in order to determine an honest appraised value of the suitcases the manager separates both travelers so they can't confer, and asks them to write down the amount of their value at no less than $2 and no larger than $100. He also tells them that if both write down the same number, he will treat that number as the true dollar value of both suitcases and reimburse both travelers that amount. However, if one writes down a smaller number than the other, this smaller number will be taken as the true dollar value, and both travelers will receive that amount along with a bonus/malus: $2 extra will be paid to the traveler who wrote down the lower value and a $2 deduction will be taken from the person who wrote down the higher amount. Describe the set of strategies of both players and find all the pure strategy Nash equilibria of the game. Restrict yourself to integer numbers only.

Answer rating: 100% (QA)

4 In this strategic game setting the two players or participabts involve two travellers who have lost their respective identical luggage or suitcases ... View the full answer