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Mathematics, 05.10.2019 03:10 Playboycxm
Aworker (the row player) can choose to either work or shirk. her boss can choose to inspect or to sleep. payoffs are as given below, where c is the cost to the boss from inspecting. assume that c > 1 and also c < 4. show that there is no pure strategy equilibrium. solve for a mixed strategy equilibrium. how does the probability that the boss inspects change as c increases? how does the probability that the worker works increase with c? (these comparative statics results are sometimes thought to be counter-intuitive, but they are common in mixed strategy equilibria).
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