Is it likely that they will choose payoff-maximizing action

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Reference no: EM13153928

two world leaders Mack and Nick are engaged in an arms race and face the decision whether or not to build a missile. The payoffs of Mack and Nick are as follows:

If both build a missile, both receive the payoff -10.

If both do not build a missile, both receive the payoff 0.

If one builds a missile but th eother does not, then the one who does build a missile receives the payoff 8 but the one without a missile receives the payoff -20.

1) Express this game in the normal form.

2) Does either player have a dominant strategy? Explain why or why not? Is there a dominant solution for this game?

3) Identify the Nash equilibrium of this game. Explain.

4) Which set of actions maximizes the total payoff of Nikita and Margaret? Is it likely that they will choose the payoff-maximizing actions without some communication? Why or why not?

Reference no: EM13153928

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