Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Ana and Ivan each individually and simultaneously decide whether to spend the evening at a play or a concert. Ana prefers to attend the concert twice as much without Ivan than to attend the play without him, and she prefers this three times more than being in the same place with Ivan (and at that point, she doesn't care where they are). Ivan prefers being in the same place with Ana twice as much as being at the play without her, and he prefers this four times more than being without Ana at the concert. Both have von Neumann-Morgenstern (vNM) preferences. With what probability will Ivan choose to attend the concert in Nashe's equilibrium?
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