-The Table Above Shows the Payoff Matrix Offered to Two

question 53

Multiple Choice

-The table above shows the payoff matrix offered to two suspected criminals, Bonnie and Clyde. The payoffs are the years they will spend in prison. The suspected criminals are not allowed to communicate. Which of the following statements correctly describes the equilibrium choices made by Bonnie and Clyde?

• A) The Nash equilibrium is the best outcome for Bonnie and Clyde.
• B) Bonnie and Clyde could improve upon the Nash equilibrium if they could communicate.
• C) In the Nash equilibrium, both Bonnie and Clyde deny committing the crime.
• D) Bonnie and Clyde get the best outcome for themselves because they are not allowed to communicate.
• E) There is no equilibrium in this game.

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Definitions:

Cover

Protection or security provided by an insurance policy; or in finance, to deal with a position by buying or selling securities.

Good Faith

Acting with honesty and sincerity without the intention to defraud or deceive others.

Substituted Goods

Products or items offered in place of the original goods specified in a contract, often acceptable if they meet the contract's terms and intended use.

Mutually Exclusive

A condition where two events cannot both occur at the same time, often used in statistics and probability theory.