Please construct a table and find the equilibrium for NEGLIGENCE WITH A DEFENSE OF CONTRIBUTORY NEGLIGENCE (WITH EFFICIENT LEGAL STANDARD OF CARE) John can cause an accident, which entails a monetary loss of $1000 to Jane. The likelihood ofthe accident depends on the precaution decisions by both individuals. Specifically, eachindividual can choose either "low" or “high" precaution, with the low precaution requiring nocost and the high precaution requiring the effort cost of $200 to the individual who choosesthe high precaution. The following table describes the probability of an accident for eachcombination of the precaution choices by the two individuals.Jane chooses low precautionJane chooses high precautionJohn chooses low precaution0.80.5John chooses high precaution0.70.1Question:For each of the following tort rules, (i) construct a table describing the individuals' payoffsunder different precaution pairs and (ii) find the equilibrium precaution choices by theindividuals.d) Negligence with a defense of contributory negligence (with efficient legal standard of care)

The term payoff matrix is a table used in game theory that shows the payoff received by the players…

Answered: Please construct a table and find the…

Please construct a table and find the equilibrium for NEGLIGENCE WITH A DEFENSE OF CONTRIBUTORY NEGLIGENCE (WITH EFFICIENT LEGAL STANDARD OF CARE)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.3P

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