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4. Consider the following monitoring game, similar to the one covered in Lecture. The cost of monitoring is 50. The worker's wage is 100, unless
4. Consider the following monitoring game, similar to the one covered in Lecture. The cost of monitoring is 50. The worker's wage is 100, unless caught shirking in which case it is 0. The rm's prot if the worker works is 200. The cost of effort is 50. This is summarized by the table below: Monitor Don't Monitor Work 50,50 50,100 Shirk 0,-50 100,-150 (1.) Identify any pure strategy Nash equilibrium. (ii.) Identify the mixed strategy Nash equilibrium. Describe the probability with which the worker works and the probability with which the rm monitors. (iii.) Suppose that the cost of effort decreases from 50 to 25. Describe how the payoffs in the above matrix change. (iv.) Describe how the mixed strategy Nash equilibrium changes
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