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Consider the following strategic game: Players: Two people. Actions: Player i's set of actions is given by Ai = [0, w] for i = 1,
Consider the following strategic game:
Players: Two people.
Actions: Player i's set of actions is given by Ai = [0, w] for i = 1, 2.
Payoffs: The payoffs for player 1 are u1(a1, a2) = w + a2 + (w a1)(a1 + a2), and for player 2 u1(a1, a2) = w + a1 + (w a2)(a1 + a2).
a) Find the best response function for both players.
b) Find the unique Nash equilibrium of the game.
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