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**Sue and Pete are playing Prisoner's Dilemma with the payoffs from the table below. If both of them cooperate, each will get a bonus of 2A (the public good), if only one cooperates, each will get A, and if no one cooperates there is no bonus. Sue calculated that Pete will cooperate with probability p=0.3. What should be the value of the award A so that Sue is indifferent between cooperating and defecting?**

Source:https://brilliant.org/i/zS7vun/

Suggested Guide:https://brilliant.org/competitions/hung … /training/

'And fun? If maths is fun, then getting a tooth extraction is fun. A viral infection is fun. Rabies shots are fun.'

'God exists because Mathematics is consistent, and the devil exists because we cannot prove it'

I'm not crazy, my mother had me tested.

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Have a look at https://brilliant.org/competitions/hung … ing/#mixed

The probability that Pete choses C is 0.3 while the probabiity that Pete choses D is 0.7

Since, Sue is indifferent between c and d, his expected payoffs must be equal.

0.3(6+2A) +0.7(0+A) = 0.3(12+A) + 0.7(3)

Solving yields, A = 3.9

Thats all, guys!

'And fun? If maths is fun, then getting a tooth extraction is fun. A viral infection is fun. Rabies shots are fun.'

'God exists because Mathematics is consistent, and the devil exists because we cannot prove it'

I'm not crazy, my mother had me tested.

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**bobbym****Administrator**- From: Bumpkinland
- Registered: 2009-04-12
- Posts: 105,739

Hi Agnishom;

Very good!

**In mathematics, you don't understand things. You just get used to them.****If it ain't broke, fix it until it is.****No great discovery was ever made without a bold guess. **

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Thanks

'And fun? If maths is fun, then getting a tooth extraction is fun. A viral infection is fun. Rabies shots are fun.'

'God exists because Mathematics is consistent, and the devil exists because we cannot prove it'

I'm not crazy, my mother had me tested.

Offline

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