Suppose the situation is similar to d except that player B c

Suppose the situation is similar to (d), except that player B chooses fast. what is the equilibrium outcome? Blackadder and Baldrick are rational, self-interested criminals imprisoned in separate cells in a dark medieval dungeon. They face the prisoners dilemma displayed in the following matrix. Assume that Blackadder is willing to pay $1000 for each year by which he can reduce his sentence below 20 years. A corrupt jailer tells Blackadder that before he decides whether to confess or deny the crime, she can tell him Baldricks decision. How mu Ch is this information worth to Blackadder? LO5, LO6, LO7 The owner of a thriving business wants to open a new office in a distant city. If he can hire someone who will manage the new office honestly, he can afford to

Solution

To decide the worth of the information to Blackadder we first need to know if the information is actually useful. If ones dominant strategy is known by the other, he will known what the first person is going to do, regardless of what he does.

Based on the payoff matrix we can conclude-

i. Dominant strategy of Baldrick is to confess.

ii. Blackadder\'s dominant strategy is also too confess.

iii. Thus the equilibrium outcome is to confess.

Therefore it is clear that Baldrick will confess no matter what Blackadder does. Thus the information provided by the corryupt jailer is useless, for Blackadder it worths nothing.