4. Consider the following game. There are four distinct glasses of wine on a table: three are red wine, and one is white. Two players must pick a glass of wine at the same time. If they choose the exact same glass of wine, then they each earn $1,000. Otherwise, they earn nothing. Draw the payoff matrix. What is this game's Nash equilibrium (or equilibria)? What is this game's focal point? Explain. (20%)

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
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Chapter8: Game Theory
Section: Chapter Questions
Problem 8.3P
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4. Consider the following game. There are four distinct glasses of wine on a table: three
are red wine, and one is white. Two players must pick a glass of wine at the same time.
If they choose the exact same glass of wine, then they each earn $1,000. Otherwise, they
earn nothing.
Draw the payoff matrix. What is this game's Nash equilibrium (or equilibria)? What is
this game's focal point? Explain. (20%)
5. Rational ignorance poses a serious problem for democracy, but can be partially
resolved by implementing Skin in the Game policies. For example, consider the following
law: politicians who vote for war must enlist in the military, or have a family member
enlist. How does this law (a) fall under Skin in the Game; and (b) Resolve the problem
of Rational Ignorance when it comes to foreign policy? (20%)
Transcribed Image Text:4. Consider the following game. There are four distinct glasses of wine on a table: three are red wine, and one is white. Two players must pick a glass of wine at the same time. If they choose the exact same glass of wine, then they each earn $1,000. Otherwise, they earn nothing. Draw the payoff matrix. What is this game's Nash equilibrium (or equilibria)? What is this game's focal point? Explain. (20%) 5. Rational ignorance poses a serious problem for democracy, but can be partially resolved by implementing Skin in the Game policies. For example, consider the following law: politicians who vote for war must enlist in the military, or have a family member enlist. How does this law (a) fall under Skin in the Game; and (b) Resolve the problem of Rational Ignorance when it comes to foreign policy? (20%)
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