Labour shortages have become a common issue for many Employers (E). Since the beginning of the pandemic, many Workers (W) have quit their jobs for 1) fear of getting sick, 2) being burnout, or 3) better opportunities elsewhere. To retain Workers, Employers can increase wages or improve working conditions (such as allowing work at home). And to ensure businesses do not shut down, Governments (G) can provide financial aid to Employers or provide no financial aid to contain their rising debts. Figure 2 depicts the extensive-form representation of this game. Aid 2,2,2 G Increase No 2,2,1 E Improve Aid Stay 2,1,2 G Figure 2 W No Aid G 4, 3,3 1,2,2 Quit Increase No 3,4,3 E Improve Aid 3, 3, 4 G No 3,3,3 5) Explain in a maximum of two lines whether or not this is a game of perfect information. 6) Explain in a maximum of two lines whether or not this is a game of complete information. 7) Find the subgame perfect Nash equilibrium(a), if any, by highlighting each player's equilibrium strategy (ies) on Figure 2A in the answer booklet.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Questions 5 to 7
Labour shortages have become a common issue for many Employers (E). Since the beginning of
the pandemic, many Workers (W) have quit their jobs for 1) fear of getting sick, 2) being burnout,
or 3) better opportunities elsewhere. To retain Workers, Employers can increase wages or improve
working conditions (such as allowing work at home). And to ensure businesses do not shut down,
Governments (G) can provide financial aid to Employers or provide no financial aid to contain
their rising debts. Figure 2 depicts the extensive-form representation of this game.
Aid
G
Increase
No
E
2,2,1
Improve
Aid
Stay
2,1,2
G
Figure 2
W
No Aid
G
Quit
4, 3,3 1, 2, 2
*
Increase
No
E
3, 4, 3
Improve
2,2,2
X
5) Explain in a maximum of two lines whether or not this is a game of perfect information.
6) Explain in a maximum of two lines whether or not this is a game of complete information.
7) Find the subgame perfect Nash equilibrium (a), if any, by highlighting each player's equilibrium
strategy (ies) on Figure 2A in the answer booklet.
Aid
G
3,3,4
*
No
3,3,3
Transcribed Image Text:Questions 5 to 7 Labour shortages have become a common issue for many Employers (E). Since the beginning of the pandemic, many Workers (W) have quit their jobs for 1) fear of getting sick, 2) being burnout, or 3) better opportunities elsewhere. To retain Workers, Employers can increase wages or improve working conditions (such as allowing work at home). And to ensure businesses do not shut down, Governments (G) can provide financial aid to Employers or provide no financial aid to contain their rising debts. Figure 2 depicts the extensive-form representation of this game. Aid G Increase No E 2,2,1 Improve Aid Stay 2,1,2 G Figure 2 W No Aid G Quit 4, 3,3 1, 2, 2 * Increase No E 3, 4, 3 Improve 2,2,2 X 5) Explain in a maximum of two lines whether or not this is a game of perfect information. 6) Explain in a maximum of two lines whether or not this is a game of complete information. 7) Find the subgame perfect Nash equilibrium (a), if any, by highlighting each player's equilibrium strategy (ies) on Figure 2A in the answer booklet. Aid G 3,3,4 * No 3,3,3
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