MicroEconomics

4. (15 points) Game Theory Google and Apple are the two of the major sources of employment for computer scientists. Each firm can choose the following benefits package to offer to their employees: (a) competitive salaries and health insurance, (b) competitive salaries and no health insurance, (c) non-competitive salaries and health insurance and (d) non-competitive salaries and no health insurance. If a firm offers a competitive salaries and the opponent a non-competitive; the one that offers the competitive salaries will earn a 100 payoff and the one that offers the non-competitive only 50. If both offer a competitive salary, each will earn 0 payoff, if both offer a non-competitive salary, both will earn 200 payoff. Additionally, if a firm offers health insurance and the opponent offers no health insurance; the one that offers the health insurance will earn 50 payoff and the one that offers no health insurance will earn -50 payoff. If both firms offer health insurance, each will earn 0 payoffs and if both offer non health insurance, each will earn 100 in payoffs. (a) (10 points) Write the payoff matrix, find best response and Nash Equilibrium. (b) (5 points) What is the outcome of the game if the Google and Apple follow a maximin strategy