1. a) Sterios b) Karen 2. a) Heads b) Tails 3. a) Heads b) Tails 4. a) Heads b)

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Question

1. a) Sterios b) Karen

2. a) Heads b) Tails

3. a) Heads b) Tails

4. a) Heads b) Tails

Suppose Stellos and Karen are playing a game in which both must simultaneously choose the strategy Heads or Tails. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices (rather than the actual flipping of a coin). For example, the lower-right cell shows that if Stellos chooses Tails and Karen chooses Tails, Stellos will receive a payoff of 1 and Karen will receive a payoff of 2.

Explanation / Answer

Karen does not has any dominant strategy but Sterios has a dominant strategy to chose heads as it gives maximum payoff irresoective of choice of Karen.

The unique equilibrium is when stelios chooses head and karen chooses head. As this is the only strategy when both are better off

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1. a) Sterios b) Karen 2. a) Heads b) Tails 3. a) Heads b) Tails 4. a) Heads b)

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