Manager of a corporate division faces the possibility

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Q. The manager of a corporate division faces the possibility of an audit every yr. She prefers to spend time preparing if she will be audited; otherwise, she would prefer to invest her time somewhere else. The auditor, who gets recognized for uncovering troubles, prefers to audit unprepared clients. If the players match their actions (i.e., the manager prepares and the auditor audits or the manager doesn't prepare also the auditor doesn't audit), the manager wins with a payoff of 20 also the auditor loses with a payoff of -20. If the actions do not match, the auditor wins with a payoff of 20; also the manager loses with a payoff of -20. Diagram this game also comment on the equilibrium.

Reference no: EM1322927

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