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Your and your partner are working together on a project. Where your effort towards the project is y and your partner's effort is p, the
Your and your partner are working together on a project. Where your effort towards the project is y and your partner's effort is p, the project's value will equal a(y + p) + yp. You will share this value equally (each of you getting half of it) once the project is complete. For both you and your partner, effort is costly: y units of effort bears a cost of y2 for you, and similarly p units of effort comes with a cost of p2 for your partner. Therefore your payoff is 0.5[a(y + p) + yp] y2 and your partner's is 0.5[a(y + p) + yp] p2 Consider a sequential version of the game described above, with a = 4 and with the only effort levels available to you and your partner being 0, 1 and 2. You choose your effort level first. Your partner observes your effort level, then chooses theirs. Select all of the options that accurately describe a pure strategy subgame perfect Nash equilibrium of this game. You will only earn the points for this question if you select all the correct answers, and only the correct answers. Note: it is acceptable to use the shorthand { Your strategy, your partner's strategy). C] a. Both players choose 1 C] b. (1,1) C] c. (111,111) 1:) d. (1,111) 1:) e. (1,112) 1:) f. (1,111or112) Continue to consider the sequential version of the game described at the start of this problem, with a = 4 and with the only effort levels available to you and your partner being 0, 1 and 2. You choose your effort level first. Your partner observes your effort level, then chooses theirs. Select a\" of the options that accurately describe a pure strategy subgame perfect Nash equilibrium of this game. You will only earn the points for this question if you select all the correct answers, and only the correct answers. Note: it is acceptable to use the shorthand ( Your strategy, your partner's strategy). C] 3. Both choose 2 C] b. (2,2) C] c. (2,222) C] d. (2,112) C] e. (1,112) C] 1. (2,111 or112)
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