Two anglers, Ray and Charley, fish from the same lake. The lake has 1000 fish in
ID: 1216328 • Letter: T
Question
Two anglers, Ray and Charley, fish from the same lake. The lake has 1000 fish in it to start. If they behave strategically, they each catch 400 fish this year, and each catch 224 the following year. If they cooperate, each catches 3331/3 fish this year and each catches 289 fish the following year. Their payoff matrix associated with these strategies are given as Coop Defect Coop (-2.341 1, -2.341 1) ?(-2.5438, -2.2561) Defect (-2.256 1, -2.5438) (-2.4142, -2.4142). Determine the Nash equilibrium or equilibrium for this game, explain your reasoning, and give an apology between this game and at least one other relevant scenario from conflict economics.Explanation / Answer
Th Nash equilibrium for this game is both co-operate , and each get payoff of 2.341
This is because Ray and charley both are having co-operate as there dominent strateegy which means each gets higher payoff by co-operating then defecting regardless of wether other player co-operate or defect. so, since both are bettter off by co-operating , hence both co-operate will be a nash equilibrium
An other example from conflict economics will be of any industry in which there exists duopoly, Let's take the exmple of Coca cola and Pepsi, if they both collude, then they can charge the higher price and can earn more profit then in case of competing with each other.