Game+Theory+3

You go out to dinner with some friends. You decide to split the bill evenly to make things easier. You are all facing the decision of whether to get the better tasting and more expensive meal, or a less expensive meal. The most expensive meal is not worth the extra ten dollars that it costs, however it is definitely worth the small amount more that you would only have to pay upon splitting the bill. However, you could all end up paying 10 dollars more, assuming you're all on the same train of thought and are entertaining the option of ordering the more expensive meal. Assume that the expensive meal costs $20 and brings $19 dollars worth of satisfaction. Assume that the other option costs $10 and brings $13 of satisfaction. This numbers could help determine a nash equilibrium.
 * __ Dinner Outing __** Description/Rules

Materials Required Only a piece of paper and a pencil each to write down your orders.

Predicted Results Each friend will end up ordering the expensive meal. However, this would result in them going home short one dollar's worth of satisfaction. This means that the dominant strategy for each player is to order the expensive dish, meaning that that box will be the Nash Equilibrium. No matter what the other person does, you will always have the option of ordering the most expensive dish which, based on the numbers in the game theory box, is the best choice. Because each player has a dominant strategy, that determines that the Nash Equilibrium is -1 for each, although it is possible for them to both end up with +3 if they were to make an agreement. The table below will help to illustrate this and all of the gains/losses for each possibility.


 * **Dinner Outing** || Expensive Meal || Inexpensive Meal ||
 * Expensive Meal || -1/-1 || 4/-2 ||
 * Inexpensive Meal || -2/4 || 3/3 ||