Question 1. Consider the following game, called matching pennies, which you are playing with a friend. Each of you has a penny hidden in your hand, facing either heads up or tails up. You know which way the penny is facing in your own hand. On the count of three, you simultaneously show your pennies to each other. If the face-up side of your coin matches your friends, you get to keep both pennies. If they do not match, your friend gets to keep both. Who are the players in this game? What are each player's strategies? b. Construct a payoff matrix for this game. c. Does either player have a dominant strategy? Explain d. Is there a Nash equilibrium? Explain. a.

ZTRDCK The Asker · Economics

Transcribed Image Text: 1. Consider the following game, called matching pennies, which you are playing with a friend. Each of you has a penny hidden in your hand, facing either heads up or tails up. You know which way the penny is facing in your own hand. On the count of three, you simultaneously show your pennies to each other. If the face-up side of your coin matches your friends, you get to keep both pennies. If they do not match, your friend gets to keep both. Who are the players in this game? What are each player's strategies? b. Construct a payoff matrix for this game. c. Does either player have a dominant strategy? Explain d. Is there a Nash equilibrium? Explain. a.
More
Transcribed Image Text: 1. Consider the following game, called matching pennies, which you are playing with a friend. Each of you has a penny hidden in your hand, facing either heads up or tails up. You know which way the penny is facing in your own hand. On the count of three, you simultaneously show your pennies to each other. If the face-up side of your coin matches your friends, you get to keep both pennies. If they do not match, your friend gets to keep both. Who are the players in this game? What are each player's strategies? b. Construct a payoff matrix for this game. c. Does either player have a dominant strategy? Explain d. Is there a Nash equilibrium? Explain. a.
Community Answer
GECJC2

【General guidance】The answer provided below has been developed in a clear step by step manner.Step1/4The given situation says that you and your friend both has a penny hidden in your hand and both of you show up simultaneously, if both the pennies matches you get both the pennies and if it shows different faces your friend gets both the penniless. This is a simultaneous move game with two players.a. There are two players in the game: Player 1 (You) and Player 2 (Friend).Both the players have two strategies each: either to show up heads or tails.Explanation:This part shows the two players and their strategies.Step2/4b. The payoff matrix for this game can be drawn as shown below;HeadsTailsHeads2 , 00 , 2 Tails0 , 2 2 , 0Player 1 (You) are the Row player represented by 2 and 3.Player 2 (friend) is the Column Player represented by B and C.Explanation:The first number in each cell is your ... See the full answer