Two neighboring homeowners i 1 2 simultaneously choose


Two neighboring homeowners, i = 1, 2, simultaneously choose how many hours li to spend maintaining a beautiful lawn. The average benefit per hour is

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and the (opportunity) cost per hour for each is 4. Homeowner i 's average benefit is increasing in the hours neighbor j spends on his own lawn, since the appearance of one's property depends in part on the beauty of the surrounding neighborhood.

a. Compute the Nash equilibrium.

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Management Theories: Two neighboring homeowners i 1 2 simultaneously choose
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