Lala and Marmar Are Deciding Whether to Reserve a Vacation

question 73

Essay

Lala and Marmar are deciding whether to reserve a vacation room with a city view or an ocean view. Their payoffs in terms of their happiness are as follows.
a. What are the pure-strategy Nash equilibria if any?
b. What is the mixed-strategy Nash equilibrium?

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Definitions:

Transference

In psychotherapy, the phenomenon where patients project feelings or attitudes from past relationships onto the therapist.

Halo Effect

A cognitive bias where the perception of one positive trait leads to the assumption of other positive traits in an individual.

Upward Counterfactual

Thinking about how a situation could have turned out better, often leading to feelings of regret.

Magical Thinking

Believing that one’s thoughts, wishes, or desires can influence the physical world or that events are connected in ways that defy scientific principles.