ECON 333/MGEC 333/LAW 435 Game Theory and Strategy Final Examination with Answers

Document Content and Description Below

1. (30 points) Two workers independently choose how much effort to put in their jobs. If worker 1 chooses e1 ≥ 0 and worker 2 chooses e2 ≥ 0, their payoffs are given by u1(e1,e2,θ1,θ2) = θ1e1... +βe1e2 − 1 2 e 2 1 u1(e1,e2,θ1,θ2) = θ2e2 +βe1e2 − 1 2 e 2 2 where 0 < β < 1 and 0 ≤ θi ≤ 1 for i = 1,2. Assume that θi is player i’s private information: each player knows her own θ and believes that the other player’s θ is drawn from the uniform distribution over [0,1]. Find the Bayesian Nash equilibria of this game. [Show More]

Last updated: 1 year ago

Preview 1 out of 4 pages