Question: Jack and Jill are candidates running for city council. Each is trying to raise campaign funds. Their goal is to raise as much money as possible. Each candidate can choose to attack the opponent or keep the campaign clean and not run attack ads. The following information is available about the expected payoffs for using ads that attack the opponent versus using ads that promote the candidate’s positions:

If Jack uses attack ads and Jill does not, Jack can expect to raise $12,000

If Jack uses attack ads and Jill also uses attack ads, Jack can expect to raise $9,000

If Jack does not use attack ads and Jill does, Jack can expect to raise $7,000

If Jack does not use attack ads and Jill also does not use attack ads, Jack can expect to raise $10,000.

If Jill uses attack ads and Jack does not, Jill can expect to raise $12,000

If Jill uses attack ads and Jack also uses attack ads, Jill can expect to raise $8,000

If Jill does not use attack ads and Jack does use attack ads, Jill can expect to raise $5,000

If neither Jill nor Jack use attack ads, Jill can expect to raise $11,000.

Assume that each much decide on a strategy before the knowing what the other candidate will do.

a. Construct a strategic form matrix and fill in the values.

b. What is the Nash Equilibrium, if one exists?

c. If Jill publicly states that she is not using attack ads and Jack believes that will be her strategy, what will he do?

d. Is it to Jill’s advantage to make this information known even if her opponent does not publicly state what his strategy will be?