Three friends i = 1, 2, 3 get together for a few drinks and decide to share the total bill equally. Friend i's preferences are represented by the utility function u₁(x₁, y₁) = 2√x-y₁. where x; is the number of drinks that i consumes and y; is the amount of money that i pays. Each drink costs $1. (a) Describe the strategic game generated by this situation.

Three friends i = 1, 2, 3 get together for a few drinks and decide to share the total bill equally. Friend i's preferences are represented by the utility function u₁(x₁, y₁) = 2√x-y₁. where x; is the number of drinks that i consumes and y; is the amount of money that i pays. Each drink costs $1. (a) Describe the strategic game generated by this situation.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter15: Oligopoly And Strategic Behavior

Section: Chapter Questions

Problem 17P

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