Asked by Yessenia Castro on Apr 25, 2024
Verified
The equilibrium of this game indicates
A) Self-interest can sometimes lead to sub-optimal outcomes
B) Rationality can sometimes lead to inefficient outcomes
C) All of the above
D) None of the above
Sub-Optimal Outcomes
Results or situations that are less efficient or desirable than the best possible scenario.
Equilibrium
A condition where the supply and demand in the market are equal, leading to stable pricing.
- Review the efficacy of game theoretical scenarios' outcomes.
Verified Answer
SL
Stephen Laggs6 days ago
Final Answer :
C
Explanation :
The equilibrium of this game, where both may choose to cheat to avoid being the one left with nothing, demonstrates that self-interest and rationality can lead to sub-optimal outcomes (each getting a payoff of 1) compared to if neither cheated (each getting a payoff of 7).
Learning Objectives
- Review the efficacy of game theoretical scenarios' outcomes.