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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...

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...

Sign up to view the full answer

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