Question

Use the following payoff matrix for a one-shot game to answer the accompanying questions.

		Player 2
	Strategy	X	Y
Player 1	A	5, 5	0, -200
	B	-200, 0	20, 20

a. Determine the Nash equilibrium outcomes that arise if the players make decisions independently, simultaneously, and without any communication.

Instructions: You may select more than one answer. Click the box with a check mark for the correct answers and click twice to empty the box for the wrong answers. You must click to select or deselect each option in order to receive full credit.

___	(-200,0)
___	(5,5)
___	(20,20)
___	(0,-200)

Answer 1

When Player 1 chooses A, Player 2's best response (BR) is X(5).
When Player 1 chooses B, Player 2's best response (BR) is Y(20).
When Player 2 chooses X, Player 1's best response (BR) is A(5).
When Player 2 chooses Y, Player 1's best response (BR) is B(20).

Thus, BR of both players occur simultaneously when player 1 chooses A and player 2 chooses X - (5,5)and when Player 1 chooses B and player 2 chooses Y - (20,20).
There are two nash equilibrium:
(5,5) and (20,20)