Suppose that Kim and Nene are both in the public eye. They get offers to sell secrets of the other to tabloids. If both keep the secrets, they are both better off than if they get exposed. If only one is exposed, the other person is better off than if no one was exposed. Their payoffs from each option are given in the payoff matrix. Suppose that Nene and Kim play t

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter13: best-practice Tactics: Game Theory
Section: Chapter Questions
Problem 12E
icon
Related questions
Question

Suppose that Kim and Nene are both in the public eye. They get offers to sell secrets of the other to tabloids. If both keep the secrets, they are both better off than if they get exposed. If only one is exposed, the other person is better off than if no one was exposed. Their payoffs from each option are given in the payoff matrix.

Suppose that Nene and Kim play the game over four television seasons, where each season is a new game. Consider the scenarios. Remember, a tit‑for‑tat strategy is one where the person starts by cooperating and then plays whatever strategy the other firm played last.

Over four seasons, how much will Nene make if she and Kim both play tit‑for‑tat?
$
 
 
Over four seasons, how much does Nene make if she always exposes and Kim plays tit‑for‑tat?
$
 
 
Over four seasons, how much will Nene make if she plays a tit‑for‑tat strategy and Kim always exposes?
$
 
 
Over four seasons, how much will Nene make if she and Kim both always expose?
$
 
 
Does Nene have a dominant strategy when she and Kim play for four seasons?
 
Yes, always expose is a dominant strategy.
 
No, there is no dominant strategy between tit‑for‑tat and always expose in this situation.
 
Yes, tit‑for‑tat is a dominant strategy.
 
Kim
Expose secrets Keep secrets
Nene Expose
Secrets
$5

$5
$2

$10
Keep
Secrets
$10

$2
$8

$8
 
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Payoff Matrix
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning