Homework answers / question archive / The utility functions of two individuals are U; = 206, +) - 15e, and U2 = 10(e+ ey) - 15€, where e, is the effort contributed by individual 1 and e, is the effort contributed by individual 2

The utility functions of two individuals are U; = 206, +) - 15e, and U2 = 10(e+ ey) - 15€, where e, is the effort contributed by individual 1 and e, is the effort contributed by individual 2

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The utility functions of two individuals are U; = 206, +) - 15e, and U2 = 10(e+ ey) - 15€, where e, is the effort contributed by individual 1 and e, is the effort contributed by individual 2. Each individual i can set e, equal to any number between zero and one inclusive Derive the best responses of individuals. Justify your answer What is the Nash equilibrium of this game? Explain your answer and give an intuitive explanation of the derived equilibrium. [33%)
Derive the best responses of individuals. Justify your answer What is the Nash equilibrium of this game? Explain your answer and give an intuitive explanation of the derived equilibrium. Ant