Question
Two neighbors consider cleaning their street on a Sunday morning. Each neighbor has one hour that he can use to watch TV or to clean
Two neighbors consider cleaning their street on a Sunday morning. Each neighbor has one hour that he can use to watch TV or to clean the street. Denote by the time dedicated to cleaning the street and by Neighbor i, and 1 the time spent watching TV. Each neighbor considers that it is important that the street is clean and likes watching TV. Their utility functions are: 1 (1 , 2 ) = 2 ln (1 + 1 + 2 2 ) + 1 1 2 (1 , 2 ) = 2 ln (1 + 1 2 + 2) + 1 2 where 2 ln (1 + + 2 ) represents the utility of living in a clean street for Neighbor i and 1 is the utility from watching TV for Neighbor i. Calculate and represent graphically the best response functions and the Nash equilibria of the game when both neighbors take their decision simultaneously
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