Suppose there are two people. Person 1 and Person 2. Both are cleaning their house. Let X denote the time spent cleaning their house.

Suppose the Nash equilibrium for both is 20. Therefor X = 20

Total Benefit of Person 1 = Total Benefit of Person 2 = 120 (X1+X2) X1X2

THEREFOR total benefit of each person = 120 (20+20) 400

= 47600.

Cost to person 1 = 2(x1)^2

= 2(20)^2

=800

NET benefit Person 1 = 47600 - 800 = 46800

Net benefit person 2 = 46800

Question 1

Suppose now X = 40

where Net benefit = 8000 for person 1 and person 2

Why is this no longer a nash equilibrium? Explain