Alice and Betsy Are Playing a Game in Which Each

question 7

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 $100.If both play the strategy stay, then each gets a payoff of $400.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)Never, since $400 > $100.
• B)Whenever D < $400.
• C)When D > C and C > $100.
• D)When $100 > C and D > $400 but not when $400 > D.
• E)Whenever $100 > C.

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