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See the picture of the question below, please let me know if more info needed: l. Game Theory (Background) Two entrepreneurs, named Andy and Mike,
See the picture of the question below, please let me know if more info needed:
l. Game Theory (Background) Two entrepreneurs, named Andy and Mike, work together on a tech startup. They each decide whether to devote full attention to the project, i.e. to "cooperate," or to work with some other side project individually, i.e. "alone." The cooperative project only succeeds if both devote their full attention to it. Their individual net payoffs hence depend on the other entrepreneur's action. (10 points) (a) Payoffs are listed below, with Andy's payoffs listed first and Mike's payoffs listed second. Mike Cooperate Mike Work Alone Andy Cooperate Andy Work Alone Find all Nash Equilibria of this game. What do you think will happen? (5 points) (b) Andy's side project is as a real estate developer. He can fire his staff, which reduces his payoffs from going it alone. If Andy chooses to fire his staff payoffs change to the following: Mike Cooperate Mike Work Alone Andy Cooperate Andy Work Alone -3,3 Find all Nash Equilibria of this game. What do you think will happen? If you were Andy, would you fire your staff? (5 points)
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