The following situation is played out between two students at a school. They are both working together on a school project. They must decide how much effort they both put into a group project. If the student does low effort and the other student does high effort, then they will get a good grade for little work. The table below shows what the persons happiness would be if they give a specific action by themselves and the other player.
For example If john gives low effort and jill gives high effort, john will get 8 happiness since he does no work but gets a good grade and jess will get low happiness since she needs to do more work for johns lack of work.
What kind of game is this? How does this differ from normal markets?
What is the players jesses dominant strategy? What is the games Nash equilibrium?
Suppose the teacher changes how grades are given out, now if one person gives low effort, they will be penalized. So, the game becomes this:
How does this change jesses dominate strategy? How does this change the Nash equilibrium?
