Big Pig and Little Pig Have Two Possible Strategies, Press

question 32

Multiple Choice

Big Pig and Little Pig have two possible strategies, Press the Button, and Wait at the Trough.If both pigs choose Wait at the Trough, both get 2.If both pigs choose Press the Button, then both pigs get 5.If Little Pig presses the button and Big Pig waits at the trough, then Big Pig gets 10 and Little Pig gets 0.Finally, if Big Pig presses the button and Little Pig waits at the trough, then Big Pig gets 3 and Little Pig gets 2.In Nash equilibrium,

• A)both pigs will wait at the trough.
• B)Little Pig will get a payoff of 2 and Big Pig will get a payoff of 3.
• C)Little pig will get a payoff of zero.
• D)Little Pig will get a payoff of 5 and Big Pig will get a payoff of 5.
• E)the pigs must be using mixed strategies.

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset, which evenly spreads the cost over its useful life.

Initial Investments

The initial amount of money spent to start a project, purchase an asset, or establish a business venture, often before earning any returns.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquid funds available for operations.

Income Tax Expense

This represents the amount of money a company expects to pay in income taxes based on its taxable income for a given period.