Question: Please help me with this U4. [22 marks] Two identical students, Alec and Zara, are applying for a summer internship. They are the only applicants.
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U4. [22 marks] Two identical students, Alec and Zara, are applying for a summer internship. They are the only applicants. They need to take an aptitude test first and the results of this test determine who gets the internship. They need to decide how much effort to put into test preparationHigh or Low. The higher the effort, the higher the score, but also the higher the effort cost. The company is going to choose the student with the highest score. If both students get the same score, the company hires both for the internship. a. [4 marks] Is there a strategic interdependence between Alec and Zara? Explain your reasoning. b. [6 marks] Identify and explain each student's best response to every choice by the other student. c. [6 marks] Claim: both of them putting in LOW effort is not an equilibrium of the game. True, False or Uncertain? Explain your reasoning. d. [6 marks] Claim: both of them putting in HIGH effort is the efficient outcome. True, False or Uncertain? Explain your reasoning
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