Application of Econs theory unto ,
Della and Jim are the young couples who are poor but love each other and are ready to sacrifice anything for each other. They both wish to give the other a surprise Christmas gift. Della considers selling her hair to buy a chain for Jim’s watch. Jim considers selling his watch to buy a comb for Della. In the novel, they both do that after struggling.
Two pure strategy equilibria: (keep hair, sell watch) and (sell hair, keep watch)
But there still exists a mixed strategy equilibrium: Della (Jim) sells hair (watch) with the probability 2/3.
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