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Need help answering question 3. Thanks! C. [This problem expands on the textbook problems 8.1 and 8.2 from Homework 3.] In any given period, a

Need help answering question 3. Thanks!

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C. [This problem expands on the textbook problems 8.1 and 8.2 from Homework 3.] In any given period, a monitoring agency can in spect a facility, or not, spending its time fullling its other man dated tasks. The facility being monitored can either ignore safety regulations, e.g. maintenance on re suppression systems or the pro- vision of safety equipment, putting its employees at risk, or follow safe procedures that do not put employees at risk. This strategic situation is formalized as a 2 x 2 game with the normal (Inspect) (Other) Ignore Follow (,(Tl' (1T,(7r 0) Here, F > 0 is the facility's ne paid for ignoring safety regulations, B > 0 is the benet (cost savings) to ignoring them, R > 0 is the monitoring agency's net reward to nding violations, and C > 0 is their cost to inspecting a facility that is in compliance. 1. Give the facility's best response to Inspect, and to Other. Give the monitoring agency's best response to Ignore, and to Follow. With these, show that there is no pure strategy equilibrium for this game. 3. Give the facility's expected payoffs to ignoring regulations as a function of 13, the probability that the monitoring agency performs an inspection, and show that the value of 3 that makes the facility indifferent between ignoring and following is ,8" = 733

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