Nikhil and Swati are playing a game designed to model labor relations called the "gift exchange game." In this game, Swati takes the role of an "employer" and Nikhil takes the role of an "employee." The employer's moves are to pay a "high wage" or a "low wage." The employee chooses to exert "high effort" or "low effort" in their job. The high wage (paid by the employer to the employee) is $3. The low wage is $1. Exerting high effort costs the employee $1. Exerting low effort costs the employee $0.

If the employee exerts high effort, the employer will earn $6 of revenue.

If the employee exerts low effort, the employer will earn $3 of revenue.

Note: These dollar amounts are revenue, not profit. The only cost the employer has to pay is the wage paid to the employee.

1)For the simultaneous move version of the game, set up the game in normal form (i.e. the payoff matrix), and find the pure strategy Nash Equilibrium or equilibria. Explain how you arrive at your solution.