Question

Consider the following game, called matching pennies, which you are playing with a friend. Each of you has a penny hidden in your hand, facing either heads up or tails up (you know which way the one in your hand is facing). On the count of "three," you simultaneously show your pennies to each other. If the face-up side of your coin matches the face-up side of your friend’s coin, you get to keep the two pennies. If the faces do not match, your friend gets to keep the pennies.a. Who are the players in the game? Whatare each players strategy?b. Is there a dominant strategy? If so what?c. Is there an equilibrium?

Answer 1

a. The two players playing the game

b. No dominant strategy

c. No equilibrium

Explanation:

a. The players are the two people playing the game of matching pennies

The strategy of the players are to meet the conditions of them keeping the pennies by having either heads or tails

The payoff of the game are as follows;

Player A keeps the two pennies when the outcome matches

Player B keeps the two pennies when the outcome does not match

The payoff of the game are as follows;

Player A

Head Tails

Player B Head 1, -1 -1, 1

Tails -1 1 1, -1

Where:

x, y

x = Player A

y = Player B

1 = Getting to keep the two pennies

-1 = Losing a penny

b. There are no best strategy because the game is one of chance whereby the result of the strategy of one player depends on the side of the penny facing up by the other player.

c. There is no equilibrium as the possible outcomes are equal hence the outcomes can be even or one sided.