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Bob and Tom are two criminals who have been arrested for burglary. The police put Tom and Bob in separate cells. They offer to let Bob go free if he confesses to the crime and testifies against Tom. Bob is also told that he will serve a 15-year sentence if he remains silent while Tom confesses. If he confesses and Tom also confesses, they will each serve a 10-year sentence. Separately, the police make the same offer to Tom. Assume that if Bob and Tom both remain silent, the police only have enough evidence to convict them of a lesser crime and they will serve 3-year sentences.
a. Use this information to make a payoff matrix for Bob and Tom.
b. Does Bob have a dominant strategy? If so, what is it?
c. Does Tom have a dominant strategy? If so, what is it?
d. What sentences do Bob and Tom serve? How might they have avoided this outcome?
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