psu.instructure.com C ww.zillow.com/la... G baytree cir boynton beac Baytree Cir, Boynton Bea... R 5312 Ventura Dr, Delray B... Quiz: Alternating Reciprocity D Question 6 80 pts 1. Consider a simultaneous move game between two movie theaters - Cinema World (CW) and Movie Land (ML). Each year, the theaters must decide whether to invest in remodeling their spaces. The total market share is worth $10 million. Remodeling costs a theater $2 million. If they both choose the same strategy, they split the market equally. If only one theater remodels that theater gets the entire market share. So, for example, if both remodel, they each get $3 million (5-2). a. Draw this game in the normal form with CW as the row player and ML as the column player. Find the Nash equilibrium. Is the Nash equilibrium Pareto efficient? Explain. (2 pts.) b. Suppose the owner of CW will retire at the end of 4 years and the theater will be torn down for new development. So, in essence, the theaters will now play this game 4 times in row with a finite end. What strategy will the players play in equilibrium in each of these 4 iterations? (3 pts.) c. Now imagine that the two theaters play the game indefinitely. If they each assumes the other follows a Grim Trigger strategy, what discount rate (6) can sustain the Pareto efficient strategy? Show your work. (15 pts.)