Question
Consider the following game: Jerry (player 1) works as a sales executive for George (player 2) who owns a pharmaceutical company. Jerry can either shirk
Consider the following game: Jerry (player 1) works as a sales executive for George (player 2) who owns a pharmaceutical company. Jerry can either shirk (S) or work (W). Working costs Jerry `g' and produces sales revenue of `v' for George. George can either choose to inspect (I) or not inspect (NI). An inspection costs `h' to George but provides evidence of whether Jerry shirks. George pays a wage `w' to Jerry unless he has evidence that Jerry has shirked in which case Jerry gets 0. Both the players choose their strategies simultaneously. Assume w > g > h > 0.
Is there any mixed strategy nash equilibrium in this game. If yes then show workings for it.
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