Suppose That the Cost of Avoiding an Accident If a Motorist

Multiple Choice

Suppose that the cost of avoiding an accident if a motorist and pedestrian adopts a diligent strategy is $2. If an accident occurs, the pedestrian incurs accident costs of $30. If both players adopt a negligent strategy, the probability of an accident is 0.1. If either player adopts a diligent strategy, there is 0.05 chance that an accident will occur. If both players adopt a diligent strategy, the probability that an accident will occur is 0.01. The Nash equilibrium strategy profile for a no-liability tort law regime is:

A) {Negligent, Negligent}.
B) {Negligent, Diligent}.
C) {Diligent, Negligent}.
D) {Diligent, Diligent}.
E) There is no unique Nash equilibrium.