The environmental authorities want to have high water quality in a lake. By the lake there is a large factory, and environmental efforts here affect water quality. Quality is also affected by others factors. The authorities cannot fully control the factory's environmental performance. Suppose the factory can choose High or Low effort, and that the result will be either Good or Bad. High effort cost more, but increases the chances of the result being Good.

Assume that Low Bet certainly gives Bad result, while High Bet gives Good Result with 70% probability and Poor result with 30% probability. Suppose the cost of the factory at High effort is 500, while the cost of Low Effort is 100. Government valuation of the lake at Poor Result is 500, while the valuation at Good Result is 2000. We see away from the factory's valuation of the result (water quality). What is the total expected net worth of the government and the factory at Low and High effort?