Consider the following simultaneous move game: If both players choose strategy A

Question

Consider the following simultaneous move game:
If both players choose strategy A, player 1 earns $489 and player 2 earns $489.
If both players choose strategy B, then player 1 earns $739 and player 2 earns $472.
If player 1 chooses strategy B and player 2 chooses strategy A, then player 1 earns $332 and player 2 earns $317.
If player 1 chooses strategy A and player 2 chooses strategy B, then player 1 earns $932 and player 2 earns $347.

What is the maximum amount Player 1 should be willing to pay for the opportunity to move first instead of moving at the same time as Player 2?

Explanation / Answer

Solution

Player 2 (on horizontal) and player 1 (on vertival)

Now,

If player 1 choses A player 2 will choose A and if player 1 choses B player 2 will choose B

Strategy A : Minimum earning player 1 is going to earn in this game is 489 when he choses startegy A and player 2 choses strategy A.

Strategy A : Similarly the maximum earning player 1 can earn in this game is 739 when he choses strategy B and player 2 choses strategy B

So player A can give maximum : 739-489 = 250

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