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      Question

      Consider a bargaining game:

      src="https://www.ixambee.com/questionimage/Chapter/1645520198-6.PNG" alt="" /> Find pure strategy Nash equilibrium.
      A {low, yes} Correct Answer Incorrect Answer
      B {low, low} Correct Answer Incorrect Answer
      C {yes, yes} Correct Answer Incorrect Answer
      D {yes, low} Correct Answer Incorrect Answer
      E Doesn’t exist Correct Answer Incorrect Answer

      Solution

      Suppose 1 chooses “low” then best response of 2 will be to choose “yes”. Now consider the other way round if 2 chooses “yes” then 1’s best response will be “low”. So neither of two would want to deviate. Applying the same logic to other points we deduce {low, yes} is the only Nash Equilibrium.

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