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Two Friends (Peter and Mary) have to decide whether or not to clean the house. If they both clean the house (cooperative case) Mary receives a wage...

This question was answered on Nov 14, 2012. View the Answer
Two Friends (Peter and Mary) have to decide whether or not to clean the house. If they both clean the house (cooperative case) Mary receives a wage equal to $3,000 and Peter receives $4,000. If both do not clean (non-cooperative case), they will have to pay $1,000. If Mary cleans the house and Peter does not, Mary will receive a salary of $4,000. However, Peter will receive a benefit (from enjoying of a clean house) of $4,000. Finally, if Peter cleans the house and Mary does not, Peter receives a salary equal to $2,800. In this case, Mary will get a benefit of $2,800. What is the Nash equilibrium of this game if it has to be played twice (in two consecutive periods)?
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Two Friends (Peter and Mary) have to decide whether or not to clean the house. If they both
clean the house (cooperative case) Mary receives a wage equal to $3,000 and Peter receives
$4,000. If...

This question was asked on Nov 13, 2012 and answered on Nov 14, 2012.

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