Scenario 6.1: Tasha and Gloria are friends who each produce beaded headbands. Each can choose to work somewhat hard and expend $10 worth of effort, or can work extremely hard and expend $15 worth of effort. If either works somewhat hard, she can produce headbands that sell for a total of $22. If either works extremely hard, she can produce headbands which sell for a total of $30. Both Tasha and Gloria are equally good at making beaded headbands.
-Refer to Scenario 6.1. If both Tasha and Gloria play their dominant strategies, Tasha's net payoff will be ________ and Gloria's net payoff will be ________.
A) $15; $12
B) $15; $15
C) $30; $30
D) $12; $12

Question

Quizplus · Accepted Answer

The dominant strategy for both Tasha and Gloria is to work extremely hard, as it maximizes their individual payoffs regardless of the other's action. Working extremely hard yields a total of $30, and after expending $15 worth of effort, the net payoff for each is $15.