In: Economics
Textbook 4.6: Two roommates each need to choose to clean their apartment, and each can choose any amount of time ti ≥ 0 to clean. If their choices are ti and tj , then player i’s payoff is given by (10 − tj)ti − t 2 i . (This payoff function implies that the more one roommate cleans, the less valuable is cleaning for the other roommate). (a) What is the best response correspondence for each player i = 1, 2? (b) Which choices survive one round of IESDS? (c) Which choices survive IESDS?
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