Question: Hi! I need some help understanding these problems. Thank you! Moonlighting game Consider a version of the moonlighting game in which two players, 1 and

 Hi! I need some help understanding these problems. Thank you! Moonlighting

Hi! I need some help understanding these problems. Thank you!

game Consider a version of the moonlighting game in which two players,

Moonlighting game Consider a version of the moonlighting game in which two players, 1 and 2, are both endowed with 12. Player 1 can choose either G) to give away 3, in which case player 2 receives the tripled amount 9, or 7) to take 3, in which case player 2 loses 3. In this sequential game, player 2 may then choose either R) to reward player 1 with 3 at a cost of 3, or P) to punish player 1 and reduce l's payoff by 6 at a cost of 2 to player 2. That is, player 1's available strategies are a E {G,T} , and player 2's available strategies are be { R, P} . 13. Calculate each player's payoffs for each set of strategies, and enter them in the table on the cover sheet. Suppose for problems 14 to 16 that players have egoistic preferences, specifically, u; = x;,i = 1,2 . 14. What is 2's best response (R or P) to 1 choosing G? 15. What is 2's best response (R or P) to 1 choosing T? 16. What strategy pair, {a, b} , is the subgame perfect Nash equilibrium? For the remaining problems in this section, consider a utility function that incorporates Rabin kindness (k; ) and perceived kindness ( k, ) functions in addition to material utility: u, = x, +a,k,k,,i = 1,2 17. Calculate the fair payoffs to player 1, , and to player 2, 72 , and enter them in the table on the cover sheet. 18. Calculate k, , the kindness of player 1 toward 2, and k2, the kindness of player 2 toward 1, for each strategy and belief, and enter these in the table on the cover sheet. 19. Suppose now a, =4 and a2 = 8. Calculate the utilities of the players, u, and u2 , and enter them in the table on the cover sheet. 20. What is 2's best response (R or P) to 1 choosing G? 21. What is 2's best response (R or P) to 1 choosing T? 22. What strategy pair, {a, b} , is the subgame perfect Nash equilibrium

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