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Unformatted text preview: . Carrying the pails of water down requires considerable effort. Both Jill and Jack would be willing to pay $2 each to avoid carrying one bucket down the hill, and an additional $3 to avoid carrying a second bucket down the hill. 1. (assuming that Jill and Jack make independent decisions in this question.) Given market prices, how many pails of water will each child fetch from the top of t h e h i l l ? Ans: _Jill:___________; Jack_ _ 2. Jill and Jack’s parents are worried that the two children don’t cooperate enough with one another. Suppose they make Jill and Jack share equally their revenues from selling the water. Given that both are self-interested, construct the payoff matrix for the decisions Jill and Jack face regarding the number of pails of water each should carry. (Label your diagram well, no need to explain.) On the same diagram, circle the equilibrium outcome in red . Jill- End - Jack...
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