Consider a game where each player picks a number from 0 to 60. The guess that is

Question

Consider a game where each player picks a number from 0 to 60. The guess that is closest to half of the average of the chosen numbers wins a prize. If several people are equally close, then they share the prize. The game theory implies that (A) all players have dominant strategies to choose 0 (B) all players have dominant strategies to choose 30 (C) there is a Nash equilibrium where all players pick 0 (D) there is a Nash equilibrium where all players pick positive numbers Behavioral data in such games suggests that (A) most subjects choose 0; B) most subjects choose 30; (C) common answers include 30, 15, 7.5, and 0; (D) most subjects use randomization.

Explanation / Answer

The game theory implies that :

C) there is Nash equilibrium where all players pick 0

since picking the random number will reduce the probability of winning for each player. While choosing a number which is logical to each player i.e 0 will make them share the price.thus every one wins even though the prize is shared.

Why 0 , the guess that is closest to half the average of choosen number wins. If every one chooses 0 then the number that is closest to half of average will also be 0. So there is sure win.

B) Behavioral Data in such game suggest :

D) most subjects use randomization.

since the behavioral data suggests people pick the number which are dear to them . ex lucky numbers , sentiment numbers etc..

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