Chapter 1. Chapter 10a

Step 1

Solved Problems
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You must read each slide, and complete any questions on the slide, in sequence.

Question

Wojciech and Maribel each want the honor of earning the top exam score and winning the Econ Prize, but would have to pull an all-nighter to do so. Also, neither wants to lose. Winning would give 10 units of utility, but the all-nighter costs 2 units of utility. Losing the informal competition costs 10 units of utility. If both choose to study or both choose not to study, there is a tie. Neither wins or loses, but would lose 2 units for the all-nighter and zero otherwise.

If Wojciech does not study but Maribel does, 31AjG7gnQrJADYXrzaOkSpwG1Qa5aXghaw9haA== wins and QtW/stH+IqLpy/HRiKPp97EV2jldS2EWsSow/Q== loses.

3
Whoever studies longer gets the top score and thus the prize.

Step 2

Question

Wojciech and Maribel each want the honor of earning the top exam score and winning the Econ Prize, but would have to pull an all-nighter to do so. Also, neither wants to lose. Winning would give 10 units of utility, but the all-nighter costs 2 units of utility. Losing the informal competition costs 10 units of utility. If both choose to study or both choose not to study, there is a tie. Neither wins or loses, but would lose 2 units for the all-nighter and zero otherwise.

Because Maribel won by pulling an all-nighter, her net payoff is EHPpFW8vMeHzDGV1X3w1CJszCbq8tb2q units of utility. Wojciech’s payoff when he loses is G6LNY8QHgXnrxz4mH+/jYJjsJBW12WrR units of utility.

3
Maribel gains 10 points for winning, but the cost of the all-nighter must be subtracted, giving a net gain of 8 points. Wojciech loses 10 for losing the contest, but did not lose any sleep.

Step 3

Question

Wojciech and Maribel each want the honor of earning the top exam score and winning the Econ Prize, but would have to pull an all-nighter to do so. Also, neither wants to lose. Winning would give 10 units of utility, but the all-nighter costs 2 units of utility. Losing the informal competition costs 10 units of utility. If both choose to study or both choose not to study, there is a tie. Neither wins or loses, but would lose 2 units for the all-nighter and zero otherwise.

If neither studies, Maribel’s net payoff is K0XLCQrUBbm5eKYIdruVmUQQbTrYUE10 units of utility and Wojciech’s payoff is K0XLCQrUBbm5eKYIdruVmUQQbTrYUE10 units of utility.

3
Not studying means no prize, but no fatigue. In addition, with no winner, there is no loser in the contest.

Step 4

Question

Wojciech and Maribel each want the honor of earning the top exam score and winning the Econ Prize, but would have to pull an all-nighter to do so. Also, neither wants to lose. Winning would give 10 units of utility, but the all-nighter costs 2 units of utility. Losing the informal competition costs 10 units of utility. If both choose to study or both choose not to study, there is a tie. Neither wins or loses, but would lose 2 units for the all-nighter and zero otherwise.

If both study, and there is therefore no winner, Maribel’s net payoff is rzOEszxZ3Muv3sT4C1/qj/hZNIfk21nN units of utility and Wojciech’s payoff is rzOEszxZ3Muv3sT4C1/qj/hZNIfk21nN units of utility.

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Here, there is no winner and no loser in the contest, but both players lost sleep.

Step 5

Question

Wojciech and Maribel each want the honor of earning the top exam score and winning the Econ Prize, but would have to pull an all-nighter to do so. Also, neither wants to lose. Winning would give 10 units of utility, but the all-nighter costs 2 units of utility. Losing the informal competition costs 10 units of utility. If both choose to study or both choose not to study, there is a tie. Neither wins or loses, but would lose 2 units for the all-nighter and zero otherwise.

Maribel
Wojciech Study Don’t Study
Study (FmAhxBkQqN0=‚ FmAhxBkQqN0=) (8‚ -10)
Don’t Study (v9iuhbs6g/A=‚ L6bSXEGJIC8=) (1Wh3cvJ2xF4=‚ 1Wh3cvJ2xF4=)
Table
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This is the information from parts b-d in matrix form. Note the costs are assigned negative points, and make sure to read the grid correctly!

Step 6

Question

Wojciech and Maribel each want the honor of earning the top exam score and winning the Econ Prize, but would have to pull an all-nighter to do so. Also, neither wants to lose. Winning would give 10 units of utility, but the all-nighter costs 2 units of utility. Losing the informal competition costs 10 units of utility. If both choose to study or both choose not to study, there is a tie. Neither wins or loses, but would lose 2 units for the all-nighter and zero otherwise.

Maribel
Wojciech Study Don’t Study
Study (-2‚ -2) (8‚ -10)
Don’t Study (-10‚ 8) (0‚ 0)
Table

If Maribel studies, Wojciech’s utility is higher if he chooses zl7XYNwYMTaEmd+CYcWEDxRayD/KVjie.

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Start in the middle column. Compare the left-hand numeric values in the two cells. -2 > -10, representing a smaller loss if Wojciech studies all night.

Step 7

Question

Wojciech and Maribel each want the honor of earning the top exam score and winning the Econ Prize, but would have to pull an all-nighter to do so. Also, neither wants to lose. Winning would give 10 units of utility, but the all-nighter costs 2 units of utility. Losing the informal competition costs 10 units of utility. If both choose to study or both choose not to study, there is a tie. Neither wins or loses, but would lose 2 units for the all-nighter and zero otherwise.

Maribel
Wojciech Study Don’t Study
Study (-2‚ -2) (8‚ -10)
Don’t Study (-10‚ 8) (0‚ 0)
Table

If Maribel does not study, Wojciech’s utility is higher if he chooses zl7XYNwYMTaEmd+CYcWEDxRayD/KVjie.

3
Start in the right-hand column. Compare the left-hand numeric values in the two cells. 8 > 0, representing a larger gain if Wojciech studies all night.

Step 8

Question

Wojciech and Maribel each want the honor of earning the top exam score and winning the Econ Prize, but would have to pull an all-nighter to do so. Also, neither wants to lose. Winning would give 10 units of utility, but the all-nighter costs 2 units of utility. Losing the informal competition costs 10 units of utility. If both choose to study or both choose not to study, there is a tie. Neither wins or loses, but would lose 2 units for the all-nighter and zero otherwise.

Maribel
Wojciech Study Don’t Study
Study (-2‚ -2) (8‚ -10)
Don’t Study (-10‚ 8) (0‚ 0)
Table

If Wojciech studies, Maribel’s utility is higher if she chooses zl7XYNwYMTaEmd+CYcWEDxRayD/KVjie.

3
Start in the middle row. Compare the right-hand numeric values in the two cells. -2 > -10, representing a smaller loss if Maribel studies all night.

Step 9

Question

Wojciech and Maribel each want the honor of earning the top exam score and winning the Econ Prize, but would have to pull an all-nighter to do so. Also, neither wants to lose. Winning would give 10 units of utility, but the all-nighter costs 2 units of utility. Losing the informal competition costs 10 units of utility. If both choose to study or both choose not to study, there is a tie. Neither wins or loses, but would lose 2 units for the all-nighter and zero otherwise.

Maribel
Wojciech Study Don’t Study
Study (-2‚ -2) (8‚ -10)
Don’t Study (-10‚ 8) (0‚ 0)
Table

If Wojciech does not study, Maribel’s utility is higher if she chooses zl7XYNwYMTaEmd+CYcWEDxRayD/KVjie.

3
Start in the bottom row. Compare the right-hand numeric values in the two cells. 8 > 0, representing a smaller loss if Maribel studies all night.

Step 10

Question

Wojciech and Maribel each want the honor of earning the top exam score and winning the Econ Prize, but would have to pull an all-nighter to do so. Also, neither wants to lose. Winning would give 10 units of utility, but the all-nighter costs 2 units of utility. Losing the informal competition costs 10 units of utility. If both choose to study or both choose not to study, there is a tie. Neither wins or loses, but would lose 2 units for the all-nighter and zero otherwise.

Maribel
Wojciech Study Don’t Study
Study (-2‚ -2) (8‚ -10)
Don’t Study (-10‚ 8) (0‚ 0)
Table

In this game, the net utility for both students will be higher, if UIpGks+IIGZrrr8FNK6za3HrggF8iF76HWr/gDt5gSWAqyKtitCIANIkF2xgZOGyxL9L+A==, than if AAsxcyA1FFD7UobPbIWbqePkGktw87+ZhkxNxt0ZGTFHN2crE8Hy8hNFZPiLKlQy58D8Fw==.

3
This is an example of the classic “Prisoner’s Dilemma.” Utility if both pull all-nighters is (-2, -2), while not doing so would give the students (0, 0).