Explain the manager of a corporate division

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Reference no: EM1399703

Auditing Game
The manager of a corporate division faces the opportunity of an audit every year. She chooses to spend time preparing if she will be audited otherwise she would choose to invest her time elsewhere. The auditor who gets accepted for uncovering problems prefers to audit unprepared clients. If the players match their actions that is the manager prepares and the auditor audits or the manager doesn't prepare and the auditor doesn't audit the manager wins with a payoff of 20 and the auditor loses with a payoff of -20. If the actions do not competition the auditor wins with a payoff of 20 and the manager loses with a payoff of -20. Diagram this game as well as comment on the equilibrium.

Reference no: EM1399703


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