Alice and Betsy Are Playing a Game in Which Each

question 20

Multiple Choice

Alice and Betsy are playing a game in which each can play either of two strategies, leave or stay.If both play the strategy leave, then each gets a payoff of $200.If both play the strategy stay, then each gets a payoff of $800.If one plays stay and the other plays leave, then the one who plays stay gets a payoff of $C and the one who plays leave gets a payoff of $D.When is the outcome where both play leave a Nash equilibrium?

• A)When D > C and C > $200.
• B)Never, since $800 > $200.
• C)Whenever D < $800.
• D)When $200 > C and D > $800 but not when $800 > D.
• E)Whenever $200 > C.

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Definitions:

Ouija Board

A flat board marked with letters, numbers, and other symbols, used to attempt communication with spirits through a movable indicator or planchette.

Reasonably Priced

Items or services offered at a price that is considered fair and affordable.

Endowment Effect

The psychological phenomenon where individuals value an owned object higher than its market value.

Natural Talent

Inborn abilities or aptitudes that an individual possesses, often manifesting as exceptional skills or competencies in specific areas.