ADMS 3330 Study Guide - Nash Equilibrium

• School: York University
• Department: Administrative Studies
• Course: ADMS 3330
• Professor: Douglas Kong

Document Summary

net income could happen if unexpected event took place, which has not been taken into consideration when creating compensation contract and as such rendering a contract incomplete. For example, crash of stock market resulting in worldwide economic crises affected everyone"s net income. Similarly new accounting standards, such as introduction of ifrs, can affect how company accounts for income and reduce its net income as a result. Exercise 12: _______________ _____________: eu(hard) = 0. 9 v(100 + 0. 10x2,000) + 0. 1 v(100 + 0. 10x900) - 4. Eu(shirks) = 0. 1 v(100 + 0. 10 x 2,000) + 0. 9 v(100 + 0. 10 x 900) 1. 1. Yvonne accepts because her reservation utility is greater than both of the expected utilities: eu(hard) = 0. 9 v(52. 3 + 0. 0921 x 2,000) + 0. 1 v(52. 3 + 0. 0921 x 900) - 4. Eu(shirks) = 0. 1 v(52. 3 + 0. 0921 x 2,000) + 0. 9 v(52. 3 + 0. 0921 x 900) 1. 1.