How do the equilibria change as c increases

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Reference no: EM133703143

Assignment:

Two people can finish a project if, and only if, they both exert effort. They are both better off if they both exert effort and perform the task than if neither exerts effort (and nothing is accom- plished); the worst outcome for each person is that she exerts effort and the other does not (in which case again nothing is accomplished). Specifically, the players' preferences are represented by the expected value of the payoff functions as shown below, where c is a positive number less than one representing the cost of exerting effort.

How do the equilibria change as c increases? Explain the reasons for this change.

Reference no: EM133703143

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