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In a project, executive and boss are working together. The executive can be sincere or insincere, and the Boss can either reward or penalize. The executive gets no advantage for being sincere but gets utility for being insincere (30), for getting rewarded (10) and for being penalized (-30). The Boss gets utility from seeing sincere (20) or insincere (-10) behavior. They also get utility for giving rewards and by penalizing, but the size of the utility change depends on whether the reward follows sincere (20) or insincere (10) work. Similarly, the size of the utility change depends on whether the penalty follows sincere (-10) or insincere (0) behavior.
a) Find out the Nash equilibrium making use of the extensive form and.
b) Suggest ,what could the Boss do to improve the end result?
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In your own organisation find an example where break-even analysis is/could be applied.
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