Suppose That in the Cost of Avoiding an Accident If

Multiple Choice

Suppose that in the cost of avoiding an accident if a motorist and pedestrian adopt a diligent strategy is $10. If an accident occurs, the pedestrian incurs accident costs of $100. If both players adopt a negligent strategy, the probability of an accident is 0.40. If either player adopts a diligent strategy, there is 0.35 chance that an accident will occur. If both players adopt a diligent strategy, the probability that an accident will occur is 0.25. What is the Nash equilibrium strategy profile for a no-liability tort law regime?

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