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This is game theory question. Please answer in detail.Thanks in advance. 1. (15 points) Let there be three persons. Person 1 cares about her income,
This is game theory question. Please answer in detail.Thanks in advance.
1. (15 points) Let there be three persons. Person 1 cares about her income, but also person 2's and person 3's income. She is altruistic towards person 2, but when it comes to person 3 she is selfish. Precisely, she values each unit of her income as 4 units of person 2's income. For example, she is indifferent, other things being equal, between giving up 10 units of her own income if person 2's income is increased by 40 units. However, she values each unit of her income as she devalues 3 units of income of person 3. For example, she is indifferent, other things being equal, between giving up 10 units of her own income if person 3's income is decreased by 30 units. Can these preferences of person 1 be represented by a payoff function? If yes, demonstrate such a function and show that it represents the given preferences. If not, prove this impossibilityStep by Step Solution
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