- Individuals 1 and 2 are forming a company. The value of their relationship depends on the effort that each expends. Suppose that individual i's utility from the relationship is x² + x; − xixj, where x¿ is individual i 's effort and x ; is the effort of the other person (i = 1, 2). Assume x1, x2 ≥ 0. Which statement is true? There is a Nash equilibrium in which each player chooses effort level k > 0. This equilibrium is Pareto efficient. There is no mixed-strategy Nash equilibrium. There is a unique Nash equilibrium in which each player chooses no effort x¿ = x; = 0. The set of Nash equilibria in this game is finite. There is a Nash equilibrium in which xi = 0 and x ; = 1| =
- Individuals 1 and 2 are forming a company. The value of their relationship depends on the effort that each expends. Suppose that individual i's utility from the relationship is x² + x; − xixj, where x¿ is individual i 's effort and x ; is the effort of the other person (i = 1, 2). Assume x1, x2 ≥ 0. Which statement is true? There is a Nash equilibrium in which each player chooses effort level k > 0. This equilibrium is Pareto efficient. There is no mixed-strategy Nash equilibrium. There is a unique Nash equilibrium in which each player chooses no effort x¿ = x; = 0. The set of Nash equilibria in this game is finite. There is a Nash equilibrium in which xi = 0 and x ; = 1| =
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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