This figure shows the payoffs involved when Sarah and Joe work on a school project together for a single grade.They both will enjoy a higher grade when more effort is put into the project,but they also get pleasure from goofing off and not working on the project.The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.
According to the figure shown,if Sarah puts forth low effort,then Joe should:
A) put forth high effort.
B) put forth low effort.
C) leave the market.
D) give an ultimatum.

Question

This figure shows the payoffs involved when Sarah and Joe work on a school project together for a single grade.They both will enjoy a higher grade when more effort is put into the project,but they also get pleasure from goofing off and not working on the project.The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.
According to the figure shown,if Sarah puts forth low effort,then Joe should:
A) put forth high effort. 
B) put forth low effort. 
C) leave the market. 
D) give an ultimatum.

Quizplus · Accepted Answer

If Sarah puts forth low effort, Joe's best option is also to put forth low effort. This way they both will have the same payoff and can enjoy their free time together. If Joe puts forth high effort and Sarah puts forth low effort, Joe will be frustrated with Sarah and feel like he put in all the work for nothing. Therefore, both should choose the low effort option.

This Figure Shows the Payoffs Involved When Sarah and Joe