Asked by Christin Sajan on Jun 13, 2024

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​If the apartment owner decides to fine both the roommates if the apartment is dirty,such that now if neither of them clean they each get a 5 utility loss,what would the new equilibrium be now?

A) ​John cleans,Joe doesn't
B) Joe cleans,John doesn't
C) Neither of them clean the apartment
D) ​Both A&B

Nash Equilibrium

A concept in game theory where no participant can gain by unilaterally changing their strategy if the strategies of the others remain unchanged.

Utility Loss

The decrease in satisfaction or usefulness that a consumer or business experiences, often due to factors such as product failure or obsolescence.

Cleaning the Apartment

The act of tidying, sanitizing, and organizing living spaces within an apartment.

  • Comprehend the principle of Nash Equilibrium within the framework of game theory.
  • Elucidate the function of deterrents and incentives in forming strategies and achieving equilibrium.
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TT
The Tuton FamilyJun 14, 2024
Final Answer :
D
Explanation :
With the added cost of a 5 utility loss for both roommates if the apartment is dirty, neither of them would want to risk getting fined. As a result, both would prefer to clean the apartment (3 utility each) rather than getting a 5 utility loss each. However, if one of them cleans and the other doesn't, the one who cleaned would only get a utility of 1, which is much lower than the utility they would get if both cleaned. Thus, there is no dominant strategy in this case, making the Nash equilibrium of the game to be both choosing not to clean (getting 2 utility each) as no one has an incentive to deviate from their strategy. Therefore, the best choice is D, where both John and Joe do not clean the apartment.