Suppose two game-show contestants, Alex and Bob, each separately select one of three doors numbered.

Suppose two game-show contestants, Alex and Bob, each
separately select one of three doors numbered 1, 2, and 3. Both players get
dollar prizes if their choices match, as indicated in the following table:

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Suppose two game-show contestants, Alex and Bob, each separately select one of three doors numbered.
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(a) What are the Nash equilibria of this game? Which, if
any, is likely to emerge as the (focal) outcome? Explain.

(b) Consider a slightly changed game in which the choices
are again just numbers, but the two cells with (15, 15) in the table become
(25, 25). What is the expected (average) payoff to each player if each flips a
coin to decide whether to play 2 or 3? Is this better than focusing on both of
them choosing 1 as a focal equilibrium? How should you account for the risk
that Alex might do one thing while Bob does the other?

 

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