# 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.
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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.