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Consider the following two - player team production game. The players simultaneously chooses eort levels ( a 1 for player 1 and a 2 for
Consider the following twoplayer team production game. The players simultaneously chooses eort levels a for player and a for player and revenue is given by ka a Suppose that player is cost of eort is ai in monetary terms. Revenue is split equally between the players, so player is payo is ka a ai
Assume that the value of k is privately observed by player prior to her selection of a Player does not know the value of k before choosing a Player knows only that k follows uniform distribution between
a Find the Bayesian Nash Equilibrium eort levels for this game.
b Consider a variation of the game in which, after observing k and the prior to eort selection, player can provide evidence of the value of k to player That is after either realization of k player chooses either E or N If she selects E then k is revealed to player ; otherwise, player observes nothing other than that player selected N Represent this game in extensive form and calculate the perfect Bayesian equilibria. Are there any perfect Bayesian equilibria in which, at the time player selects a she is uncertain of k
c Would player prefer to have the option of revealing k as in part b relative to part a Explain.
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