Please construct a table and find the equilibrium for NEGLIGENCE WITH A DEFENSE OF CONTRIBUTORY NEGLIGENCE (WITH EFFICIENT LEGAL STANDARD OF CARE) John can cause an accident, which entails a monetary loss of $1000 to Jane. The likelihood ofthe accident depends on the precaution decisions by both individuals. Specifically, eachindividual can choose either "low" or “high" precaution, with the low precaution requiring nocost and the high precaution requiring the effort cost of $200 to the individual who choosesthe high precaution. The following table describes the probability of an accident for eachcombination of the precaution choices by the two individuals.Jane chooses low precautionJane chooses high precautionJohn chooses low precaution0.80.5John chooses high precaution0.70.1Question:For each of the following tort rules, (i) construct a table describing the individuals' payoffsunder different precaution pairs and (ii) find the equilibrium precaution choices by theindividuals.d) Negligence with a defense of contributory negligence (with efficient legal standard of care)

The term payoff matrix is a table used in game theory that shows the payoff received by the players…

Answered: Please construct a table and find the…

Please construct a table and find the equilibrium for NEGLIGENCE WITH A DEFENSE OF CONTRIBUTORY NEGLIGENCE (WITH EFFICIENT LEGAL STANDARD OF CARE)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Moral Hazard

The moral is a person's behavior towards himself /herself, society, organization, and others. Hazard is something that is happening and is not good. A person may be morally good or bad. It depends on his attitude, ethics, integrity, and values. A person may have the highest reverence for money to that for the truth. In this case, the person may lie and it is said that the person is morally bad.

Question

Please construct a table and find the equilibrium for NEGLIGENCE WITH A DEFENSE OF CONTRIBUTORY NEGLIGENCE (WITH EFFICIENT LEGAL STANDARD OF CARE)

John can cause an accident, which entails a monetary loss of $1000 to Jane. The likelihood of
the accident depends on the precaution decisions by both individuals. Specifically, each
individual can choose either "low" or “high" precaution, with the low precaution requiring no
cost and the high precaution requiring the effort cost of $200 to the individual who chooses
the high precaution. The following table describes the probability of an accident for each
combination of the precaution choices by the two individuals.
Jane chooses low precaution
Jane chooses high precaution
John chooses low precaution
0.8
0.5
John chooses high precaution
0.7
0.1
Question:
For each of the following tort rules, (i) construct a table describing the individuals' payoffs
under different precaution pairs and (ii) find the equilibrium precaution choices by the
individuals.
d) Negligence with a defense of contributory negligence (with efficient legal standard of care)

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