Find mixed strategy nash equilibrium

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Russia and the US are rivals, and they like to act tough when discussingtension spots such as Ukraine. But actually being tough isn’t always such a good idea.Imagine that both Russia and the US have two possible strategies, to be tough or to be soft. The best outcome from the point of view of a country is one where it is tough and the other country is soft – but the worst outcome for either country is where both nations choose to be tough. The second-best outcome for either country is one where both countries choose to be soft. Draw a payoff matrix representing this international game, and fill in the matrix with payoffs for both countries, using only the numerals 1, 2, 3, and 4 (once each for each of the two players). Explain your reasoning for your assignment of payoffs. Identify any pure strategy Nash equilibria outcomes in this tough or soft game, and find a mixed strategy Nash equilibrium. What are the (expected) payoffs associated with the mixed-strategy Nash equilibrium?

In another two-by-two payoff matrix using only the numerals 1, 2, 3, and 4 (once each for each of the two players), arrange the payoffs so that the matrix representsa Prisoners’ Dilemma. What characteristics of the matrix make it a Prisoners’ Dilemma? What outcome (or outcomes) do you expect in such a game?

Reference no: EM132298126

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