7 2. Mixed Strategies, the Auditing Game, and the Ramifications of Guilt, Suppose the person feels somewhatguilty when she chooses Cheat. We represent this feeling of guilt by saying that the person's payoff when shechooses Cheat (whether she is audited or not) falls by $20. The modified game is given below.Government1-9AuditNot AuditPersonp Cheat-80, 240180, 01-p Pay-10, 1900, 200(2.A) Find the value of q at which the person is indifferent between choosing cheating and paying. In finding themixed strategy for the government, show your work. Also, what are the implications for government policy? Doesthe probability of a government audit go up or down?(2.B) Find the mixed strategy for the person that makes the government indifferent between auditing and notauditing. Given the changes in the person's payoffs, are there any resulting implications or changes in her behaviorthat are a result of her guilt?(2.C) Explain your answer in (2.B)

a mixed strategy is a likelihood appropriation one purposes to arbitrarily pick among accessible…

- Mixed Strategies, the Auditing Game, and the Ramifications of Guilt,. Suppose the person feels somewh uilty when she chooses Cheat. We represent this feeling of guilt by saying that the person's payoff when she hooses Cheat (whether she is audited or not) falls by $20. The modified game is given below. Government 1-9 Audit Not Audit Person

- Mixed Strategies, the Auditing Game, and the Ramifications of Guilt,. Suppose the person feels somewh uilty when she chooses Cheat. We represent this feeling of guilt by saying that the person's payoff when she hooses Cheat (whether she is audited or not) falls by $20. The modified game is given below. Government 1-9 Audit Not Audit Person

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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