You and a coworker are assigned a team project on which your likelihood or a promotion will be decided on. It is now the night before the project is due and neither has yet to start it. You both want to receive a promotion next year, but you both also want to go to your company’s holiday party that night. Each of you wants to maximize his or her own happiness (likelihood of a promotion and mingling with your colleagues “on the company’s dime”). If you both work, you deliver an outstanding presentation. If you both go to the party, your presentation is mediocre. If one parties and the other works, your presentation is above average. Partying increases happiness by 25 units. Working on the project adds zero units to happiness. Happiness is also affected by your chance of a promotion, which is depends on how good your project is. An outstanding presentation gives 40 units of happiness to each of you; an above average presentation gives 30 units of happiness; a mediocre presentation gives 10 units of happiness. This situation can be turned into a game. (a) Who are the players in the game? (b) What are the possible strategies for each player? (c) Create a payoff matrix for this game, with the payoffs for each player being total happiness. (d) Does either player have a dominant strategy? If yes, list who has a dominant strategy and what the
You and a coworker are assigned a team project on which your likelihood or a promotion will be decided on. It is now the night before the project is due and neither has yet to start it. You both want to receive a promotion next year, but you both also want to go to your company’s holiday party that night. Each of you wants to maximize his or her own happiness (likelihood of a promotion and mingling with your colleagues “on the company’s dime”). If you both work, you deliver an outstanding presentation. If you both go to the party, your presentation is mediocre. If one parties and the other works, your presentation is above average. Partying increases happiness by 25 units. Working on the project adds zero units to happiness. Happiness is also affected by your chance of a promotion, which is depends on how good your project is. An outstanding presentation gives 40 units of happiness to each of you; an above average presentation gives 30 units of happiness; a mediocre presentation gives 10 units of happiness. This situation can be turned into a game. (a) Who are the players in the game? (b) What are the possible strategies for each player? (c) Create a payoff matrix for this game, with the payoffs for each player being total happiness. (d) Does either player have a dominant strategy? If yes, list who has a dominant strategy and what the
Chapter7: Uncertainty
Section: Chapter Questions
Problem 7.7P
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You and a coworker are assigned a team project on which your likelihood or a promotion will be decided
on. It is now the night before the project is due and neither has yet to start it. You both want to
receive a promotion next year, but you both also want to go to your company’s holiday party that night.
Each of you wants to maximize his or her own happiness (likelihood of a promotion and mingling with
your colleagues “on the company’s dime”). If you both work, you deliver an outstanding presentation.
If you both go to the party, your presentation is mediocre. If one parties and the other works, your
presentation is above average. Partying increases happiness by 25 units. Working on the project adds
zero units to happiness. Happiness is also affected by your chance of a promotion, which is depends on how
good your project is. An outstanding presentation gives 40 units of happiness to each of you; an above
average presentation gives 30 units of happiness; a mediocre presentation gives 10 units of happiness.
This situation can be turned into a game.
(a) Who are the players in the game?
(b) What are the possible strategies for each player?
(c) Create a payoff matrix for this game, with the payoffs for each player being total happiness.
(d) Does either player have a dominant strategy? If yes, list who has a dominant strategy and what the
strategy is.
(e) Are there any Nash equilibria in this game? If so, what are they?
on. It is now the night before the project is due and neither has yet to start it. You both want to
receive a promotion next year, but you both also want to go to your company’s holiday party that night.
Each of you wants to maximize his or her own happiness (likelihood of a promotion and mingling with
your colleagues “on the company’s dime”). If you both work, you deliver an outstanding presentation.
If you both go to the party, your presentation is mediocre. If one parties and the other works, your
presentation is above average. Partying increases happiness by 25 units. Working on the project adds
zero units to happiness. Happiness is also affected by your chance of a promotion, which is depends on how
good your project is. An outstanding presentation gives 40 units of happiness to each of you; an above
average presentation gives 30 units of happiness; a mediocre presentation gives 10 units of happiness.
This situation can be turned into a game.
(a) Who are the players in the game?
(b) What are the possible strategies for each player?
(c) Create a payoff matrix for this game, with the payoffs for each player being total happiness.
(d) Does either player have a dominant strategy? If yes, list who has a dominant strategy and what the
strategy is.
(e) Are there any Nash equilibria in this game? If so, what are they?
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