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In: Economics

Game Theory: Two people are engaged in a joint project. If each person i puts in...

Game Theory:

Two people are engaged in a joint project. If each person i puts in the effort xi ? [0, 1], which costs her c(xi), the outcome of the project is worth f(x1, x2). The worth of the project is split equally between the two people, regardless of their effort levels. Find the Nash equilibria of the game when f(x1, x2) = 3x1x2 and c(xi) = x2i . Is there a pair of effort levels that yields higher payoffs for both players than do the Nash equilibrium effort levels?

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Rahul Sunny answered 2 years ago
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