A Bargaining Game Two players, PI and PII, have to divide 23 M&M's: 12 regular ones (R's) and 11 peanut-coatedones (P's). PI likes both types equally but PII likes only the P's (she will have no use for anyR's she gets). Moreover, both players' preferences are known to both and the bargaining willbe restricted to the allocations of M&M's, e.g., no monetary side payments or othermodifications involved. (a) PI Divides and PII Chooses: PI divides the M&M's into two piles in any way hechooses. Then PII selects one of the piles, leaving the other one to PI. What will bethe outcome of this game? (b) PII Divides and PI Chooses: The same as in Problem 1, but with the order reversed.What will be the outcome?

Does each individual in a prisoners dilemma benefit more from cooperation or from pursuing self-interest? Explain briefly.

Consider the case of global environmental problems that spill across international borders as a prisoners dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries, A and B. Each country can cheese whether to protect the environment, at a cost of 10, or not to protect it, at a cost of zero. If one country decides to protect the environment, there is a benefit of 16, but the benefit is divided equally between the two countries. If both countries decide to protect the environment, there is a benefit of 32, which is divided equally between the two centuries. In Table 12.10, fill in the costs, benefits, and total payoffs to the countries of the following decisions. Explain why, without some international agreement, they are likely to end up with neither country acting to protect the environment.