deciding whether to take a dangerous performance-enhancing drug. If
one athlete takes the drug and the other does not, the one who takes
the drug wins the prize. If both or neither take the drug, they tie and
split the prize. Taking the drug imposes health risks that are equivalent
to a loss of X dollars.
a) Draw a payoff matrix describing the decisions the athletes face.
b) For what X is taking the drug the Nash equilibrium?
c) Does making the drug safer (that is, lowering X) make the
athletes better or worse off? Explain.