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THIS IS GAME THEORY! 8.7 a. Debt and Repayment: A project costing $100 yields a gross return of $110. A lender (player 1) is approached

image text in transcribed THIS IS GAME THEORY!

8.7 a. Debt and Repayment: A project costing $100 yields a gross return of $110. A lender (player 1) is approached by a debtor (player 2) requesting a standard loan contract to complete the project. If the lender chooses not to offer a loan, then both parties earn nothing. If the lender chooses to offer a loan of $100, the debtor can realize the project's gains and is obliged by contract to repay $105. For simplicity assume that money is continuous and that the debtor can choose to return any amount of money x

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