(See Problem 1

(See Problem 1.) Alice and Betsy are playing a game in which each can play either of two strategies, leave or stay. If both play the strategy leave, then each gets a payoff of $100. If both play the strategy stay, then each gets a payoff of $400. If one plays stay and the other plays leave, then the one who plays stay gets a payoff of $C and the one who plays leave gets a payoff of $D. When is the outcome where both play leave a Nash equilibrium?

A) Never, since $400 > $100.
B) Whenever D < $400.
C) When D > C and C > $100.
D) When $100 > C and D > $400 but not when $400 >D.
E) Whenever $100 > C.

Correct Answer:

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