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Two athletes of equal ability are competing for a prize of $10,000. each is deciding whether to take a dangerous performance-enhancing drug. if one athlete takes the drug and the other does not, the one who takes the drug wins the prize. if both or neither take the drug, they tie and split the prize. taking the drug imposes health risks that are equivalent to a loss of x dollars.

Respuesta :

jepessoa

Answer:

The best option is when both athletes decide not to take drugs and each earns $5,000.

Explanation:

In a Nash equilibrium scenario:

                                                  Athlete 1's decision

                                       take drug                   do not take drug

Athlete 2's                     $5000 - x/                        $0 /

decision                                  $5,000 - x                     $10,000 - x

take drug

do not                           $10,000 - x/                        $5,000 /  

take drug                                          $0                               $5,000

The best possible situation occurs when both athletes decide not to take the drugs. In this situation both athletes win $5,000. If both athletes decide to take the drug and charge the price, they will both earn $5,000 - X.

The Nash equilibrium should show the situation where both players win the most regarding the other player's strategy.

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