Question
Two players have an equal share in a partnership's revenue stream. They need to decide individual effort allocation. Let ei be the effort level of
Two players have an equal share in a partnership's revenue stream. They need to decide individual effort allocation. Let ei be the effort level of player i = 1, 2, and write e = (e1, e2). Total revenue for the partnership is r(e) = 12e1e2, and is equally divided between the partners. On the other hand, the individual cost of effort level ei is ci (ei) = e 3 i , and the individual effort level chosen by i is not observed by partner j. Note that any non-negative effort level is part of partner i's set of pure strategies. Player i's payoff is given by ui (e1, e2) = 12r (e) ? ci (ei) = 6eiej ? e 3 i Find the set of pure strategy NE for this partnership game.
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