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Author Question: A Nash equilibrium will always provide both players with their highest payoffs possible. Indicate ... (Read 87 times)

lb_gilbert

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on: Jul 1, 2018
A Nash equilibrium will always provide both players with their highest payoffs possible.
 
  Indicate whether the statement is true or false

Question 2

In the presence of asymmetric information, a fixed-fee contract
 
  A) achieves production efficiency.
  B) can lead to opportunistic behavior on the part of the agent.
  C) is impossible to write.
  D) will result in the principal earning all of the profit.


onowka

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Reply #1 on: Jul 1, 2018
Answer to Question 1

False. The prisoners' dilemma, for example, has an equilibrium that is strictly worse for both players than another possible outcome (don't confess for both).

Answer to Question 2

B


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