Scenario 13.7
Consider the game below about funding and construction of a dam to protect a 1,000-person town. Contributions to the Dam Fund, once made, cannot be recovered, and all citizens must contribute $1,000 to the dam in order for it to be built. The dam, if built, is worth $70,000 to each citizen.
-Refer to the game in Scenario 13.7. If each player chose a maximin strategy, the outcome would be:
A) $69,000, $69,000.
B) $0, -$1000.
C) -$1000, $0.
D) $0, $0.
E) a mixed strategy equilibrium.

Question

Scenario 13.7
Consider the game below about funding and construction of a dam to protect a 1,000-person town. Contributions to the Dam Fund, once made, cannot be recovered, and all citizens must contribute $1,000 to the dam in order for it to be built. The dam, if built, is worth $70,000 to each citizen. 
-Refer to the game in Scenario 13.7. If each player chose a maximin strategy, the outcome would be:
A) $69,000, $69,000. 
B) $0, -$1000. 
C) -$1000, $0. 
D) $0, $0. 
E) a mixed strategy equilibrium.

Quizplus · Accepted Answer

In a maximin strategy, each player chooses the strategy that maximizes their minimum payoff. Both players choosing $0 ensures they avoid negative payoffs, resulting in the outcome $0, $0.

Scenario 13.7 Consider the Game Below About Funding and Construction of a of a Dam