1. Two siblings, Sarah and Tom are playing a simultaneous hit and tell game. Sarah can hit Tom or not and Tom can tattle on Sarah or not. Relative to no hitting and no tattling, if Sarah hits Tom, and he tattles they both experience a loss of 10. Not telling, gets Tom a bruise, a loss of 5 but Sarah gains 5. If he tattles untruthfully, he gets a gain of 5 and Sarah loses 5. If they get along, no one gets anything ??If Tom tattles, what would Sarah’s best response be
2. Two street racers are playing a simultaneous game of chicken. They have to race towards each other and whoever swerves first is chicken and faces shame, a loss of 8, while the winner enjoys a gain of 3. If neither stop, they would crash into each other, a loss of 10. If both of them swerve at the same time, they are both chicken and face a loss of 5 each ??What would the Nash equilibrium be in this game?
3. Assume a simultaneous-move game. ? Firm B Low Price High Price Firm A Low Price 10,10 100,2 High Price 2,100 90, 90 ??What is the best response of firm B, given firm A is charging a low price?