Determine the mixed-strategy Nash equilibrium for this game. and for The mixed-strategy Nash equilibrium is for Mimi to support with probability = Jeff to look for work with probability 0: (Enter your responses rounded to two = decimal places.)
Determine the mixed-strategy Nash equilibrium for this game. and for The mixed-strategy Nash equilibrium is for Mimi to support with probability = Jeff to look for work with probability 0: (Enter your responses rounded to two = decimal places.)
Chapter12: Business Cycles And Unemployment
Section: Chapter Questions
Problem 14SQ
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Transcribed Image Text:The Great Recession of 2007-2009 hit young people particularly hard, with long-lasting
effects. The U.S. unemployment rate for 20- to 24-year-olds went from 8.5% in 2007 to 16%
in 2009, stayed above 13% through 2012, but fell to 7% by the first half of 2018. As a result,
more adult children moved back to live with their parents or asked for financial help than in
previous years.
The share of 25- to 34-year-olds living in multigenerational households rose from 11% in
1980 to 15% in 2016. A recent survey finds that 41% of parents provide financial support to
their 23- to 28-year-old offspring. Indeed, parents give 10% of their income on average to
their adult children.
Mimi wants to support her son Jeff if he looks for work but not otherwise. Jeff (unlike most
young people) wants to try to find a job only if his mother will not support his life of
indolence. Mimi and Jeff's payoff matrix is illustrated in the figure to the right.
If Jeff and Mimi choose actions simultaneously, what are the pure- or mixed-strategy
Nash equilibria?
Determine the pure-strategy Nash equilibrium for this game.
A. This game has no Nash equilibria.
B. The Nash equilibrium is for Mimi to support and Jeff to look for work.
C. The Nash equilibrium is for Mimi to not support and Jeff to loaf.
D. The Nash equilibrium is for Mimi to support and Jeff to loaf.
E. The Nash equilibrium is for Mimi to not support and Jeff to look for work.
Determine the mixed-strategy Nash equilibrium for this game.
The mixed-strategy Nash equilibrium is for Mimi to support with probability M
Jeff to look for work with probability 0,=. (Enter your responses rounded to two
decimal places.)
and for
C
Support
Mimi
No Support
Look for Work
8
- 4
2
Jeff
1
Loaf
- 4
0
6
0
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