Consider the game in figure 3. Player 2 T 3,3 1,4 B 4,1 2,2 Player 1 Figure 3: A

Question

Consider the game in figure 3. Player 2 T 3,3 1,4 B 4,1 2,2 Player 1 Figure 3: A Prisoner's Dilemma game. Assume that the payoffs in the figure are S values. (i) Assume that both players have risk neutral utility functions. Find all of the Nash equilibria of this game. (ii) Next, assume that the row player has other regarding preferences with = 0 and = (while the column player has the same preferences as before). Find all of the Nash equilibria of this game (iii) Next, assume that both players have other regarding preferences with = 0 and = (iv) Compare your results from parts (i) and (iii). Using these results, explain one possible mechanism through which a public advertising campaign that announces how often people donate to charity could help generate more cooperative play in prisoner's dilemma-like scenarios.

Explanation / Answer

1). The Nash equilibrium is B,R ie (2,2)

This is because , TR is preffered over TL

BR over BL

BL over TL

BR over TR

Thus, we can see that BR is preffered over all other games.

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