Which outcomes are pareto efficient

Reference no: EM13671064

Paul and John are working on a project for which they will receive the same grade. The utility to each of them would be their grade minus their own effort. If Paul puts in x units of effort and John puts in y units of effort their grade will be equal to the higher of the two effort levels, x and y. So for a given choice of x and y Paul's utility is given by 2 max{x, y} - x while John gets a utility of 2 max{x, y} - y.
The possible choices for effort level are 1 and 2.
Write down the payoff matrix for this game.
a) Which outcomes are Pareto efficient?
b) Find the best response functions.
c) State all Nash Equilibria of the game.

Reference no: EM13671064

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