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diligent: P pay tax (-10, 10) our work. audit hide IRS (-20,5) Nature Jeff Bezos not audit lazy: 1 - P pay tax (-10, 10) audit hide IRS (10,0) Let P=0.3. Find a Bayes Nash Equilibrium of the game. (-20, 0) not audit (10,5)

diligent: P pay tax (-10, 10) our work. audit hide IRS (-20,5) Nature Jeff Bezos not audit lazy: 1 - P pay tax (-10, 10) audit hide IRS (10,0) Let P=0.3. Find a Bayes Nash Equilibrium of the game. (-20, 0) not audit (10,5)

A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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In the following game, Jeff Bezos decides whether to pay taxes or hide his money offshore. However, he does not know if the IRS is lazy or diligent this year. He only knows that with probability P the IRS is diligent (So they are lazy with probability 1-P). The IRS knows its own type. If Bezos pays his taxes the game ends. If he hides his money offshore, the IRS can either audit or not audit him. The game tree with the associated payoffs is given below. The payoffs are ordered (Bezos, IRS). diligent: P pay tax (-10, 10) (a.) your work. audit hide (-20,5) IRS Nature Jeff Bezos not audit (10,0) lazy: 1 - P pay tax (-10, 10) audit hide (-20, 0) IRS not audit (10,5) Let P=0.3. Find a Bayes Nash Equilibrium of the game. Show (b.) For what range of P, does Bezos choose to pay in a BNE? For P in this range, how does the BNE look?
Transcribed Image Text:In the following game, Jeff Bezos decides whether to pay taxes or hide his money offshore. However, he does not know if the IRS is lazy or diligent this year. He only knows that with probability P the IRS is diligent (So they are lazy with probability 1-P). The IRS knows its own type. If Bezos pays his taxes the game ends. If he hides his money offshore, the IRS can either audit or not audit him. The game tree with the associated payoffs is given below. The payoffs are ordered (Bezos, IRS). diligent: P pay tax (-10, 10) (a.) your work. audit hide (-20,5) IRS Nature Jeff Bezos not audit (10,0) lazy: 1 - P pay tax (-10, 10) audit hide (-20, 0) IRS not audit (10,5) Let P=0.3. Find a Bayes Nash Equilibrium of the game. Show (b.) For what range of P, does Bezos choose to pay in a BNE? For P in this range, how does the BNE look?
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