Is pledging 50 dollars a dominated strategy for you

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Reference no: EM13244411

Recall the espresso machinecontribution game discussed in class. You and your roommate may by an espresso machine for $50. Your value for havingthe espresso machine is $40 and your value for not having it is zero. You andyour roommate (i = 1; 2) will write down an amount of money ci, an integerbetween zero and $50.
If the sum of your two numbers c1 +c2 is at least $50 you will buythe machine. The amount roommate i pays is given by:
ci - (c1 + c2 - 50)/2

That is, he pays his pledged contribution minus half of the surplus contribution.
(a) Is pledging $50 a dominated strategy for you?
(b) Is pledging $40 a dominated strategy for you?

Reference no: EM13244411

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