Exit, Voice, and Loyalty

question 10

Multiple Choice

Exit, Voice, and Loyalty
Below is the Exit, Voice, and Loyalty game between the state and the citizen. Recall that E is the payoff that the citizen gets when she exits, L is the payoff that the state gets from retaining a loyal citizen, 0 is the payoff that the citizen gets from remaining loyal, and C is the cost that the citizen must pay for using voice.
Let E = 0.5, let L > 1, and let C = 0.75.

-What is the expected outcome of the game if you use these payoff values?

• A) citizen uses voice, state backs down
• B) citizen uses voice, state backs down, citizen exits
• C) citizen exits
• D) citizen remains loyal
• E) citizen uses voice, state backs down.

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