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Suppose two companies undertake a joint project. The revenue from the project will be shared equally between them. Each company's strategy is to choose its

Suppose two companies undertake a joint project. The revenue from the project will be
shared equally between them. Each company's strategy is to choose its effort level
which is represented by eiAAi=1,2. The revenue from the project depends on the total
effort that both companies provide and given by R(E)=120E-2E2 where E=e1+e2
is the total effort level. Also, the effort is costly; the cost of effort is e2 for company 1
and 2e2 for company 2.
a)(5 p.) Find the payoff functions for both companies
b)(8 p.) Find the best response functions for both companies
c)(7 p.) Find the Nash Equilibrium of the game
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