3. Consider a contractual setting in which the technology of the relationship between a worker (row player) and rm (column player) is given by the following underlying game: Provide a Bonus Do Not Provide a Bonus Work Hard 4, 7 -4, 8 Shirk 2, -2 o, 0 Suppose the players contract in a setting of court-imposed breach remedies. The players can write a contract specifying the strategy prole they intend to play; the court observes their behavior in the underlying game and, if one or both of them cheated, imposes a breach transfer. The players wish to support the outcome (Work Hard, Provide a Bonus). a. Write the man-ix representing the induced game under the assumption that the court imposes expectation damages. Can a contact specifying (Work Hard, Provide a Bonus) be enforced? Explain. Suppose that litigation is costly. When a contract is breached, each player has to pay a court fee of \"c" (c 2 0) in addition to the expectation damages imposed by the court. Assume that in case the court observes the outcome (Shirk, Do not Provide a Bonus), it does not impose any court fee. b. What is the induced game in this case? Under what condition on \"c\" can a contract specifying (Work Hard, Provide a Bonus) be enforced with expectation damages and court costs? c. How does your answer to part h. change if the court forces the party that deviates to pay all court costs? 4. Consider the following normal form game in which player 1 chooses a row and player 2 chooses a column. (This exercise is based on an example om Kreps, 1990).' -200, -200 200, 4 DC: 200, 4 400, 2 0, -200, -200 200, -98 2 I Kreps, D. M. (1990). Game Hear}: and Economic Modelling. Oxford: Oxford University Press. 3 a. If you were player 2 in this game and you were playing it once without the ability to engage in pre-play communication with player 1, what strategy would you choose? b. What are all the pure-strategy Nash equilibria of this game? c. Is your strategy choice in (a) a component of any pure-strategy Nash equilibrium strategy prole? (1. Suppose now that pre-play communication were possible. Would you expect to play something different from your choice in (a)