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Alice and Bob are working on a joint project. They can both either Work Hard or lay back and Goof Off. If both work

  

Alice and Bob are working on a joint project. They can both either "Work Hard" or lay back and "Goof Off". If both work hard, their project will be successful, and they both receive a pay off of 3. If both lay back and goof off, however, they will only receive a pay off of 1. In case, one player decides to work hard on the project while the other goofs off, the former (hard working) player will be annoyed and receive a pay off of 0 while the latter enjoys a pay off of 2. a. Construct the strategic matrix of the game. b. Determine the Nash equilibria in pure strategies and in mixed strategies. c. Are the Nash-equilibria in pure strategies Pareto optimal?

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a The strategic matrix of the game can be constructed as follows Bob Work Hard Goof Off Alice 3 3 0 ... blur-text-image

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