Exit, Voice, and Loyalty

question 21

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 = 0.25.

-What are the equilibrium payoffs for each player if you use these payoff values?

• A) −.25; 1 + L
• B) .5, 1
• C) .75; L
• D) .25; 1
• E) 0; 1 + L