Question 8 Two individuals each receive one hundred dollars to play the following game. Independently of...

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Question 8 Two individuals each receive one hundred dollars to play the following game. Independently of each other, they decide how much money to put in a common pot. They keep the rest for themselves. As for the money in the pot, it is increased by 60% and then distributed equally among the two individuals. For instance, suppose that the first individual puts $10 in the pot while the second individual puts $50. Increasing the total pot of $60 by 60% gives $60+36= $96 to share equally between the two individuals. So the first individual's payoff in this case is $(90+48) = $138, while the second individual's payoff is $(50+48) = $98. (a) (2 points) Compute the Nash equilibrium. (b) (1 point) Is the Nash equilibrium Pareto efficient? Explain Question 8 Two individuals each receive one hundred dollars to play the following game. Independently of each other, they decide how much money to put in a common pot. They keep the rest for themselves. As for the money in the pot, it is increased by 60% and then distributed equally among the two individuals. For instance, suppose that the first individual puts $10 in the pot while the second individual puts $50. Increasing the total pot of $60 by 60% gives $60+36= $96 to share equally between the two individuals. So the first individual's payoff in this case is $(90+48) = $138, while the second individual's payoff is $(50+48) = $98. (a) (2 points) Compute the Nash equilibrium. (b) (1 point) Is the Nash equilibrium Pareto efficient? Explain

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Question 8 a Nash Equilibrium A Nash equilibrium is a set of strategies where each players strategy ... View the full answer