Question
GIVEN: Nita / Nora Excessive Weekend Work No Excessive Weekend Work Perks 5,5 7,2 No Perks 2,7 6,6 Nash Equilibrium: (Perks, Excessive Weekend Work) -->
GIVEN:
Nita / Nora | Excessive Weekend Work | No Excessive Weekend Work |
Perks | 5,5 | 7,2 |
No Perks | 2,7 | 6,6 |
Nash Equilibrium: (Perks, Excessive Weekend Work) --> (5,5)
Cooperative Outcome: (No Perks, No Excessive Weekend Work) --> (6,6)
The game above assumes that Nita is the manager for only a single period. it is more likely that she is hired for an extended period of time and that after each period, Nita and Nora can observe the outcome and get their payoffs from the above game. suppose that Nita is hired indefinitely (i.e., forever), and that both Nita and Nora discount the future by a common discount factor of (0,1).
Q: Suppose that both players play the grim-trigger strategy of cooperating as long as their opponent has cooperated, and playing a Nash equilibrium strategy forever if she has not. derive the conditions on under which it is an equilibrium for Nita to take no perks and for Nora to choose No Excessive Weekend Work in every period.
**PLEASE DO NOT USE AI TO ANSWER THIS, PLEASE HELP ME SO I CAN LEARN AND UNDERSTAND**
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