4. Consider the two payoff matrices A and B in Table Q4a and Table Q4b respectively. The first number in each entry is the payoff received by the row player i; while the second number is the payoff received by the column player j.
Payoff matrix A:
Table Q4a
| j defect | j cooperate |
i defect | (7, 7) | (6, 7) |
i cooperate | (7, 7) | (7, 8) |
Payoff matrix B:
Table Q4b
| j defect | j cooperate |
i defect | (2, 3) | (3, 3) |
i cooperate | (1, 5) | (4, 2) |
(a) Identify which strategy pairs (if any) in these two payoff matrices are in dominant strategy equilibrium. Briefly explain your answer. (5 marks)
(b) Identify which strategy pairs (if any) in these two payoff matrices are in Nash equilibrium. Briefly explain your answer. (8 marks)
(c) Identify which outcomes in these two payoff matrices are Pareto optimal. Briefly explain your answer. (7 marks)
(d) Identify which outcomes in these two payoff matrices maximize social welfare. Briefly explain your answer. (5 marks)
