Imagine a game with a Professor and Students (who all act together as one player). TheProfessor is giving a final exam and has to decide whether to make it easy or hard. Studentshave to decide whether to put low effort, medium effort, high effort, or max effort intostudying for the exam. Both players decide simultaneously. Payoffs are as follows:
Students
Max effort High effort Medium effort Low effort
Professor Easy 4,3 3,4 2,5 1,2
Hard 6,4 5,3 1,2 0,1
1. Does Professor have a dominant strategy Why or why not?
2. Does Students have a dominant strategy? Why or why not?
3. What is the Nash Equilibrium of this game?
4. If there are multiple Nash Equilibria, which one will be se - lected in the end? If there is no Nash Equilibrium, how will the game end?
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