Assume two countries (US and Germany) are facing the decision of whether to participate in the Paris Agreement or not. The following payoff matrix contains the estimated payoffs for both countries for all possible strategies. GermanyUS JoinNot joinJoinA: (500, 360)B: (100, 200)Not joinC: (450, 300)D: (450, 350) What is the Nash equilibrium of this game if it has to be played sequentially and US moves first? US joins, Germany joins US joins, Germany does not join US does not join, Germany joins US does not join, Germany does not join

According to Nash equilibrium, if any of the players changes their strategy, nothing is gained if…

Answered: Agreement or not. The following payoff…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.4P

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Assume two countries (US and Germany) are facing the decision of whether to participate in the Paris Agreement or not. The following payoff matrix contains the estimated payoffs for both countries for all possible strategies.

	Germany
US		Join	Not join
Join	A: (500, 360)	B: (100, 200)
Not join	C: (450, 300)	D: (450, 350)

What is the Nash equilibrium of this game if it has to be played sequentially and US moves first?

		US joins, Germany joins
		US joins, Germany does not join
		US does not join, Germany joins
		US does not join, Germany does not join

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