Question
2. There are two types of partners who can establish start-ups together: Engineers and Entrepreneurs. Their partnerships produce following payoffs: - Engineer-Engineer: 6 each -
2. There are two types of partners who can establish start-ups together: Engineers and Entrepreneurs. Their partnerships produce following payoffs:
- Engineer-Engineer: 6 each
- Engineer-Entrepreneur: 8 for Entrepreneur, 0 for Engineer (because Entrepreneurs also cheat a little)
- Entrepreneur - Entrepreneur 4 each (although both cheat, both are also capable to protect themselves from cheating)
1) What is the most beneficial individual strategy (if they meet randomly)?
2) If both of them know who is who (Engineer or Entrepreneur), how the best strategy will change (if they don't meet randomly, but can choose a partner)
3) If the teams are set randomly again, but government punish cheating with a special tax of -20% of payoff and support not-cheating with a subsidy (+20%) of payoff, how the expectation of most beneficial individual strategy will change?
4) According to Question 1 (randomly set teams), find equilibrium shares of two types.
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