SCENARIO: PAYOFF MATRIX The Following Payoff Matrix Shows Outcomes of Various

Essay

SCENARIO: PAYOFF MATRIX
The following payoff matrix shows outcomes of various
strategies that the countries of Home and Foreign can follow to
decide to regulate or not regulate pollution.The columns show
Foreign's actions, and the rows show Home's actions.The values
in the upper right­hand side of each element give Foreign's net
benefits; the values in the lower left­hand side of each element
give Home's net benefits.Net benefits are the environmental
benefits from regulation minus costs associated with installing
pollution control equipment.
A) Using the payoff matrix, what is likely to happen if there are
no international agreements to limit pollution?
B) In the payoff matrix, which element represents a Nash
equilibrium?
C) Why is the element you selected in B a Nash equilibrium?